SEC Filing - Brink's Company

SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file number 1-9148 THE PITTSTON COMPANY (Exact name of registrant as specified in its charter) Virginia 54-1317776 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P.O. Box 4229, 1000 Virginia Center Parkway, Glen Allen, Virginia 23058-4229 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (804) 553-3600 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 41,573,743 shares of $1 par value Pittston Brink's Group Common Stock, 20,718,972 shares of $1 par value Pittston Burlington Group Common Stock and 8,405,908 shares of $1 par value Pittston Minerals Group Common Stock as of November 11, 1996. -- 1

Part I - Financial Information The Pittston Company and Subsidiaries CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts) September 30, December 31, 1996 1995 - ------------------------------------------------------------------------------------------------------------------ (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 54,623 52,823 Short-term investments, at lower of cost or market 2,223 29,334 Accounts receivable (net of estimated amount uncollectible: 1996 - $15,986; 1995 - $16,075) 427,322 421,246 Inventories, at lower of cost or market 41,400 46,399 Prepaid expenses 31,990 31,556 Deferred income taxes 49,841 55,335 - ------------------------------------------------------------------------------------------------------------------ Total current assets 607,399 636,693 Property, plant and equipment, at cost (net of accumulated depreciation, depletion and amortization: 1996 - $455,500; 1995 - $437,346) 519,743 486,168 Intangibles, net of amortization 317,382 327,183 Deferred pension assets 124,059 123,743 Deferred income taxes 64,686 72,343 Other assets 155,586 161,242 - ------------------------------------------------------------------------------------------------------------------ Total assets $ 1,788,855 1,807,372 - ------------------------------------------------------------------------------------------------------------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term borrowings $ 35,645 37,063 Current maturities of long-term debt 5,092 7,280 Accounts payable 238,966 263,444 Accrued liabilities 290,410 286,701 - ------------------------------------------------------------------------------------------------------------------ Total current liabilities 570,113 594,488 Long-term debt, less current maturities 149,967 133,283 Postretirement benefits other than pensions 225,110 219,895 Workers' compensation and other claims 116,235 125,894 Deferred income taxes 13,633 17,213 Other liabilities 130,738 194,620 Shareholders' equity: Preferred stock, par value $10 per share: Authorized: 2,000 shares $31.25 Series C Cumulative Convertible Preferred Stock Issued: 1996 - 115,360 shares; 1995 - 136,280 shares 1,154 1,362 Pittston Brink's Group common stock, par value $1 per share: Authorized: 100,000,000 shares Issued: 1996 - 41,573,743 shares; 1995 - 41,573,743 shares 41,574 41,574 Pittston Burlington Group common stock, par value $1 per share: Authorized: 50,000,000 shares Issued: 1996 - 20,766,572 shares; 1995 - 20,786,872 shares 20,766 20,787 Pittston Minerals Group common stock, par value $1 per share: Authorized: 20,000,000 shares Issued: 1996 - 8,405,908 shares; 1995 - 8,405,908 shares 8,406 8,406 Capital in excess of par value 417,071 401,633 Retained earnings 250,385 188,728 Equity adjustment from foreign currency translation (20,546) (20,705) Employee benefits trust, at market value (135,751) (119,806) - ------------------------------------------------------------------------------------------------------------------ Total shareholders' equity 583,059 521,979 - ------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' equity $ 1,788,855 1,807,372 - ------------------------------------------------------------------------------------------------------------------ See accompanying notes to consolidated financial statements. -- 2

The Pittston Company and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three Months Nine Months Ended September 30 Ended September 30 1996 1995 1996 1995 - -------------------------------------------------------------------------------------------------------------------------- Net sales $ 177,195 177,702 522,715 557,653 Operating revenues 609,678 574,751 1,759,654 1,605,651 - -------------------------------------------------------------------------------------------------------------------------- Net sales and operating revenues 786,873 752,453 2,282,369 2,163,304 - -------------------------------------------------------------------------------------------------------------------------- Costs and expenses: Cost of sales 167,907 167,261 531,128 542,061 Operating expenses 502,222 476,614 1,465,739 1,346,739 Restructuring and other charges, including litigation accrual - - (35,650) - Selling, general and administrative expenses 74,711 68,381 218,033 195,002 - -------------------------------------------------------------------------------------------------------------------------- Total costs and expenses 744,840 712,256 2,179,250 2,083,802 - -------------------------------------------------------------------------------------------------------------------------- Other operating income 3,684 3,135 13,742 22,417 - -------------------------------------------------------------------------------------------------------------------------- Operating profit 45,717 43,332 116,861 101,919 Interest income 880 902 2,216 2,554 Interest expense (3,409) (3,665) (10,533) (10,409) Other expense, net (2,506) (1,817) (6,912) (4,013) - -------------------------------------------------------------------------------------------------------------------------- Income before income taxes 40,682 38,752 101,632 90,051 Provision for income taxes 11,638 9,153 28,542 21,779 - -------------------------------------------------------------------------------------------------------------------------- Net income 29,044 29,599 73,090 68,272 Preferred stock dividends, net 146 (521) (773) (1,697) - -------------------------------------------------------------------------------------------------------------------------- Net income attributed to common shares $ 29,190 29,078 72,317 66,575 - -------------------------------------------------------------------------------------------------------------------------- Pittston Brink's Group: Net income attributed to common shares $ 15,841 14,613 41,714 36,124 - -------------------------------------------------------------------------------------------------------------------------- Net income per common share $ .41 .38 1.09 .95 - -------------------------------------------------------------------------------------------------------------------------- Cash dividend per common share $ .025 .023 .075 .069 - -------------------------------------------------------------------------------------------------------------------------- Pittston Burlington Group: Net income attributed to common shares $ 10,705 10,524 23,214 22,582 - -------------------------------------------------------------------------------------------------------------------------- Net income per common share $ .56 .55 1.21 1.19 - -------------------------------------------------------------------------------------------------------------------------- Cash dividends per common share $ .06 .054 .18 .162 - -------------------------------------------------------------------------------------------------------------------------- Pittston Minerals Group: Net income attributed to common shares $ 2,644 3,941 7,389 7,869 - -------------------------------------------------------------------------------------------------------------------------- Net income per common share: Primary $ .33 .51 .94 1.01 Fully diluted $ .25 .45 .82 .96 - -------------------------------------------------------------------------------------------------------------------------- Cash dividends per common share $ .1625 .1625 .4875 .4875 - -------------------------------------------------------------------------------------------------------------------------- See accompanying notes to consolidated financial statements. -- 3

The Pittston Company and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Nine Months Ended September 30 1996 1995 - ---------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net income $ 73,090 68,272 Adjustments to reconcile net income to net cash provided by operating activities: Noncash charges and other write-offs 24,259 - Depreciation, depletion and amortization 82,880 78,710 Provision for aircraft heavy maintenance 23,980 19,226 Provision for deferred income taxes 10,496 8,564 Provision (credit) for pensions, noncurrent 1,043 (2,729) Provision for uncollectible accounts receivable 5,313 3,741 Equity in earnings of unconsolidated affiliates, net of dividends received (1,364) 1,516 Other operating, net 5,401 (559) Change in operating assets and liabilities net of effects of acquisitions: Increase in accounts receivable (14,644) (49,547) Decrease (increase) in inventories 4,999 (12,601) Increase in prepaid expenses (1,105) (5,136) (Decrease) increase in accounts payable and accrued liabilities (23,046) 12,113 (Increase) decrease in other assets (7,622) 43 Decrease in other liabilities (49,437) (17,335) Decrease in workers' compensation and other claims, noncurrent (9,659) (13,500) Other, net 338 (1,464) - ---------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 124,922 89,314 - ---------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Additions to property, plant and equipment (116,294) (81,325) Aircraft heavy maintenance (15,215) (11,406) Proceeds from disposal of property, plant and equipment 12,496 18,525 Acquisitions, net of cash acquired, and related contingent payments (971) (3,727) Other, net 6,519 2,908 - ---------------------------------------------------------------------------------------------------------------------- Net cash used by investing activities (113,465) (75,025) - ---------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Additions to debt 20,375 18,482 Reductions of debt (9,510) (13,752) Repurchase of stock of the Company (8,268) (10,606) Proceeds from exercise of stock options 3,101 2,954 Proceeds from stock purchased by benefit plans 362 767 Dividends paid (13,242) (13,284) Cost of Brink's Stock Proposal (2,475) - - ---------------------------------------------------------------------------------------------------------------------- Net cash used by financing activities (9,657) (15,439) - ---------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents 1,800 (1,150) Cash and cash equivalents at beginning of period 52,823 42,318 - ---------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 54,623 41,168 - ---------------------------------------------------------------------------------------------------------------------- See accompanying notes to consolidated financial statements. -- 4

The Pittston Company and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited) (1) The Pittston Company (the "Company") prepares consolidated financial statements in addition to separate financial statements for the Pittston Brink's Group (the "Brink's Group"), the Pittston Burlington Group (the "Burlington Group") and the Pittston Minerals Group (the "Minerals Group"). The Brink's Group consists of the Brink's, Incorporated ("Brink's") and Brink's Home Security, Inc. ("BHS") operations of the Company. The Burlington Group consists of the Burlington Air Express Inc. ("Burlington") operations of the Company. The Minerals Group consists of the Coal and Mineral Ventures operations of the Company. The Company's capital structure includes three issues of common stock, Pittston Brink's Group Common Stock ("Brink's Stock"), Pittston Burlington Common Stock ("Burlington Stock") and Pittston Minerals Group Common Stock ("Minerals Stock"), which are designed to provide shareholders with separate securities reflecting the performance of the Brink's Group, Burlington Group and Minerals Group, respectively, without diminishing the benefits of remaining a single corporation or precluding future transactions affecting any Group or the Company as a whole. Holders of Brink's Stock, Burlington Stock and Minerals Stock are shareholders of the Company, which is responsible for all its liabilities. Financial developments affecting the Brink's Group, Burlington Group or the Minerals Group that affect the Company's financial condition could affect the results of operations and financial condition of all three Groups. (2) The average number of shares outstanding used in the earnings per share computations were as follows: Third Quarter Nine Months 1996 1995 1996 1995 - --------------------------------------------------------------------------------------- Brink's Stock 38,264 37,916 38,158 37,914 Burlington Stock 19,283 18,958 19,161 18,957 Minerals Stock: Primary 7,926 7,804 7,872 7,781 Fully diluted 9,819 9,964 9,920 10,013 - --------------------------------------------------------------------------------------- The average number of shares outstanding used in the earnings per share computations do not include the shares of Brink's Stock, Burlington Stock and Minerals Stock held in the Company's Employee Benefits Trust which totaled 3,256 (3,628 in 1995), 1,389 (1,814 in 1995) and 446 (619 in 1995), respectively, at September 30, 1996. (3) The amounts of depreciation, depletion and amortization of property, plant and equipment in the third quarter and nine month periods of 1996 totaled $22,609 ($20,443 in 1995) and $66,423 ($59,777 in 1995), respectively. (4) Cash payments made for interest and income taxes (net of refunds received) were as follows: Third Quarter Nine Months 1996 1995 1996 1995 - --------------------------------------------------------------------------------------- Interest $ 3,264 3,103 11,285 10,185 - --------------------------------------------------------------------------------------- Income taxes $ 7,567 1,193 15,749 17,667 - --------------------------------------------------------------------------------------- During the nine months ended September 30, 1996 and 1995, capital lease obligations of $2,130 and $4,486, respectively, were incurred for leases of property, plant and equipment. -- 5

In June 1995, the Company sold its rights under certain coal reserve leases and the related equipment for $2,800 in cash and notes totaling $2,882. The cash proceeds have been included in the Consolidated Statements of Cash Flows as "Cash flows from investing activities: Proceeds from disposal of property, plant and equipment". In March 1995, the Company sold surplus coal reserves for cash of $2,878 and a note receivable of $2,317. The cash proceeds have been included in the Consolidated Statements of Cash Flows as "Cash flows from investing activities: Proceeds from disposal of property, plant and equipment". (5) In 1988, the trustees of certain pension and benefit trust funds (the "Trust Funds") established under collective bargaining agreements with the United Mine Workers of America ("UMWA") brought an action (the "Evergreen Case") against the Company and a number of its coal subsidiaries, claiming that the defendants were obligated to contribute to such Trust Funds in accordance with the provisions of the 1988 and subsequent National Bituminous Coal Wage Agreements, to which neither the Company nor any of its subsidiaries was a signatory. In late March 1996, a settlement was reached in the Evergreen Case. Under the terms of the settlement, the coal subsidiaries which had been signatories to earlier National Bituminous Coal Wage Agreements agreed to make various lump sum payments in full satisfaction of all amounts allegedly due to the Trust Funds through January 31, 1996, to be paid over time as follows: $25,845 upon dismissal of the Evergreen Case in March 1996 and the remainder of $24,000 in installments of $7,000 in August 1996 and $8,500 in each of 1997 and 1998. The first payment was entirely funded through an escrow account previously established by the Company. The amount previously escrowed and accrued was included in "Short-term investments" and "Accrued liabilities" on the Company's balance sheet. The second payment of $7,000 was paid in the third quarter of 1996 and was funded through cash provided by operating activities. In addition, the coal subsidiaries agreed to future participation in the UMWA 1974 Pension Plan. Separate lawsuits against each of the UMWA and the Bituminous Coal Operators Association, previously reported, have also been dismissed. As a result of the settlement of these cases at an amount lower than previously accrued in 1993, the Company recorded a pretax benefit of $35,650 ($23,173 after tax) in the first quarter of 1996 in its consolidated financial statements. (6) As of January 1, 1996, the Company implemented a new accounting standard, Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires companies to review long-lived assets and certain identifiable intangibles to be held and used by an entity for impairment whenever circumstances indicate that the carrying amount of an asset may not be recoverable. In accordance with SFAS No. 121, the Company grouped its long-lived assets at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets, and determined the recoverability of such assets by comparing the sum of the expected undiscounted future cash flows with the carrying amount of the assets. The impact of adopting SFAS No. 121 resulted in a pretax charge to earnings as of January 1, 1996 for the Company's Coal operations of $27,839 ($18,095 after tax), of which $24,203 was included in cost of sales and $3,636 was included in selling, general and administrative expenses. Assets for which the impairment loss was recognized consisted of property, plant and equipment, advanced royalties and goodwill. These assets primarily related to mines scheduled for closure in the near term and idled facilities and related equipment. Based on current mining plans, geological conditions, and current assumptions related to future realization and costs, the sum of the expected undiscounted future cash flows was less than the carrying amount of the assets, and accordingly, an impairment loss was recognized. The loss was calculated based on the excess of the carrying value of the assets over the present value of estimated expected future cash flows, using a discount rate commensurate with the risks involved. The adoption of SFAS No. 121 had no impact on the Brink's and Burlington Groups' financial statements as of January 1, 1996. -- 6

(7) As of January 1, 1992, BHS elected to capitalize categories of costs not previously capitalized for home security installations. The additional costs not previously capitalized consisted of costs for installation labor and related benefits for supervisory, installation scheduling, equipment testing and other support personnel and costs incurred in maintaining facilities and vehicles dedicated to the installation process. The effect of this change in accounting principle was to increase operating profit for the Company and the BHS segment for the first nine months of 1996 and 1995 by $3,472 and $3,204, respectively, and for the third quarter of 1996 and 1995 by $1,296 and $1,255, respectively. The effect of this change increased net income per common share of the Brink's Group for the first nine months of 1996 and 1995 by $.06 and $.05, respectively, and by $.02 for both the third quarter 1996 and 1995. (8) During the quarter and nine months ended September 30, 1996, the Company purchased 10,320 and 20,920 shares of its Series C Cumulative Convertible preferred stock, respectively. Preferred dividends included on the statement of operations for the quarter and nine months ended September 30, 1996, are net of $1,020 and $2,120, respectively, which is the excess of the carrying amount of the preferred stock over the cash paid to holders of the preferred stock. During the quarter and nine months ended September 30, 1995, the Company purchased 3,700 and 16,370 shares, respectively, of its preferred stock. Preferred dividends for the third quarter and first nine months of 1995 were net of $535 and $1,579, respectively, which was the excess of the carrying amount of the preferred stock over the cash paid to holders of the preferred stock. (9) Certain prior period amounts have been reclassified to conform to current period financial statement presentation. (10) All adjustments have been made which are, in the opinion of management, necessary for a fair presentation of results of operations for the periods reported herein. All such adjustments are of a normal recurring nature. -- 7

The Pittston Company and Subsidiaries MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION (In Thousands) Three Months Nine Months Ended September 30 Ended September 30 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------------------ Revenues: Burlington $ 377,656 365,793 1,093,017 1,031,687 Brink's 192,491 176,507 551,756 480,141 BHS 39,531 32,451 114,881 93,823 Coal 172,603 173,985 507,967 545,255 Mineral Ventures 4,592 3,717 14,748 12,398 - ------------------------------------------------------------------------------------------------------------------ Consolidated revenues $ 786,873 752,453 2,282,369 2,163,304 - ------------------------------------------------------------------------------------------------------------------ Operating profit (loss): Burlington $ 20,466 17,449 45,479 39,913 Brink's 16,033 12,263 37,935 29,882 BHS 11,509 10,386 34,012 28,702 Coal 5,393 8,075 14,960 15,196 Mineral Ventures (324) (816) 1,425 675 - ------------------------------------------------------------------------------------------------------------------ Segment operating profit 53,077 47,357 133,811 114,368 General corporate expense (7,360) (4,025) (16,950) (12,449) - ------------------------------------------------------------------------------------------------------------------ Consolidated operating profit $ 45,717 43,332 116,861 101,919 - ------------------------------------------------------------------------------------------------------------------ RESULTS OF OPERATIONS - --------------------- In the third quarter of 1996, The Pittston Company (the "Company") reported net income of $29.0 million compared with $29.6 million in the third quarter of 1995. Operating profit totaled $45.7 million in the 1996 third quarter compared with $43.3 million in the prior year third quarter. Increased operating profits at Brink's Home Security, Inc. ("BHS") ($1.1 million), Brink's, Incorporated ("Brink's") ($3.8 million) and Burlington Air Express Inc. ("Burlington") ($3.0 million) as well as a decrease in operating loss at Pittston Mineral Ventures ("Mineral Ventures") ($0.5 million) were only partially offset by lower operating profits at Coal operations ($2.7 million) and higher general corporate expenses ($3.3 million) of which, $2.7 million related to the relocation of the Company's corporate headquarters to Richmond, Virginia. In the first nine months of 1996, the Company reported net income of $73.1 million compared with $68.3 million in the first nine months of 1995. Operating profit totaled $116.9 million in the first nine months of 1996 compared with $101.9 million in the 1995 nine month period. Net income and operating profit in the first nine months of 1996 included two non-recurring items which impacted the Company's Coal operations: a benefit from the settlement of the Evergreen lawsuit at an amount lower than previously accrued ($35.7 million or $23.2 million after tax) and a charge related to the implementation of a new accounting standard regarding the impairment of long-lived assets ($27.8 million or $18.1 million after tax). Increased operating profits in the first nine months of 1996 achieved at BHS ($5.3 million), Brink's ($8.1 million), Burlington ($5.6 million) and Mineral Ventures ($0.8 million) were partially offset by a decrease in operating profit at Coal operations ($0.2 million) as well as higher general corporate expenses ($4.5 million), of which, $2.9 million related to the relocation of the Company's corporate headquarters. -- 8

Burlington - ---------- The following is a table of selected financial data for Burlington on a comparative basis: Three Months Nine Months (In thousands - except per Ended September 30 Ended September 30 pound/shipment amounts) 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------------------ Revenues: Expedited freight services: Domestic U.S. $ 142,506 133,430 405,238 389,712 International 175,516 179,281 517,692 509,526 - ------------------------------------------------------------------------------------------------------------------ Total expedited freight services $ 318,022 312,711 922,930 899,238 Customs clearances 34,496 32,308 100,473 80,592 Ocean and other (a) 25,138 20,774 69,614 51,857 - ------------------------------------------------------------------------------------------------------------------ Total revenues $ 377,656 365,793 1,093,017 1,031,687 - ------------------------------------------------------------------------------------------------------------------ Operating profit: Domestic U.S. $ 11,783 8,781 25,520 20,261 International 8,683 8,668 19,959 19,652 - ------------------------------------------------------------------------------------------------------------------ Total operating profit $ 20,466 17,449 45,479 39,913 - ------------------------------------------------------------------------------------------------------------------ Depreciation and amortization $ 5,143 4,957 15,957 14,659 - ------------------------------------------------------------------------------------------------------------------ Cash capital expenditures $ 10,495 6,299 25,609 19,799 - ------------------------------------------------------------------------------------------------------------------ Expedited freight services shipment growth rate (b) (0.5%) 8.2% 2.8% 5.8% Expedited freight services weight growth rate (b): Domestic U.S. 6.7% (4.3%) 5.0% (4.2%) International (1.7%) 31.9% 4.5% 30.6% Worldwide 2.2% 12.1% 4.7% 11.5% Expedited freight services weight (million pounds) 362.0 354.0 1,059.2 1,011.3 - ------------------------------------------------------------------------------------------------------------------ Expedited freight services shipments (thousands) 1,294 1,300 3,914 3,808 - ------------------------------------------------------------------------------------------------------------------ Expedited freight services average: Yield (revenue per pound) $ .879 .883 .871 .889 Revenue per shipment $ 246 241 236 236 Weight per shipment (pounds) 280 272 271 266 - ------------------------------------------------------------------------------------------------------------------ (a) Primarily international ocean freight. (b) Compared to the same period in the prior year. Burlington's third quarter worldwide operating profit amounted to $20.5 million, an increase of $3.0 million (17%) from the level reported in the third quarter of 1995. Worldwide revenues increased by 3% to $377.7 million from $365.8 million in the 1995 quarter. The $11.9 million growth in revenues principally reflects a 2% increase in worldwide expedited freight services pounds shipped, which reached 362.0 million pounds in the third quarter of 1996, and a 12% increase in other revenues (primarily customs clearance and ocean). Worldwide expenses amounted to $357.2 million, $8.8 million (3%) higher than in the third quarter of 1995. Domestic expedited freight services revenue of $142.5 million was $9.1 million (7%) higher than the prior year quarter. Domestic operating profit increased to $11.8 million in the third quarter of 1996 from $8.8 million in the prior year quarter. Operating profit benefited from stable pricing and higher volumes in the aerospace, electronics and consumer products segments, partially offset by declines in the automotive sector. Domestic average yields continued to be modestly higher than the levels of late 1995 and early 1996. -- 9

During the quarter, Burlington benefited from the initiation in mid September of a 4.2(cents) per pound surcharge on domestic shipments. This surcharge is designed to partially offset some of the cost increases experienced by Burlington's domestic operations during 1996. These costs include the reimposition of a Federal Excise Tax on air cargo, higher jet fuel prices, a Federal Fuel Tax and new FAA-mandated security and maintenance requirements. International expedited freight services revenue of $175.5 million in the third quarter decreased slightly from the $179.3 million reported in the comparable quarter in 1995. Revenues from other activities, primarily international, which include transactions such as import related services as well as ocean freight services, increased 12% or $6.6 million to $59.6 million. International operating profit amounted to $8.7 million in the third quarter of 1996, unchanged from the 1995 quarter. International expedited freight services pricing slightly decreased from the third quarter of 1995 as overseas price weakness was only partially offset by improvement in U.S. export pricing. Burlington's worldwide operating profit amounted to $45.5 million in the first nine months of 1996, an increase of $5.6 million (14%) from the level reported in the first nine months of 1995. Worldwide revenues increased by 6% to $1,093.0 million from $1,031.7 million in the 1995 nine months. The $61.3 million growth in revenues principally reflects a 5% increase in worldwide expedited freight services pounds shipped, reaching 1,059.2 million pounds in the third quarter of 1996, and a 28% increase in other revenues (primarily customs clearance and ocean), partially offset by a 2% decline in the worldwide average yield. Worldwide expenses amounted to $1,047.5 million, $55.7 million (6%) higher than in the first nine months of 1995. Domestic expedited freight services revenue of $405.2 million in the first nine months of 1996 was $15.5 million (4%) higher than the prior year period. Domestic operating profit increased to $25.5 million in the first nine months of 1996 from $20.3 million in the prior year period. The higher operating profit reflected higher volume, lower average transportation costs, primarily the benefit of reduced Federal Excise Tax liabilities for the first nine months of the year, partially offset by lower average yields and higher fuel costs. The lower domestic average yield for the first nine months of 1996 versus the same 1995 period was due to lower average pricing and sales mix for Burlington's overnight service. International expedited freight services revenue of $517.7 million in the first nine months of 1996 represented an $8.2 million (2%) increase over the $509.5 million reported in the comparable period in 1995. Revenues from other activities increased 28% or $37.6 million to $170.1 million. International operating profit amounted to $20.0 million in the first nine months of 1996, a 2% increase from the first nine months of 1995, principally due to a 5% increase in international expedited freight service weight shipped, increased margin from import services and ocean freight and lower average transportation costs, partially offset by lower average yields. -- 10

Brink's - ------- The following is a table of selected financial data for Brink's on a comparative basis: Three Months Nine Months Ended September 30 Ended September 30 (In thousands) 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------------------ Revenues: North America (United States and Canada) $ 106,156 97,103 308,271 278,084 International 86,335 79,404 243,485 202,057 - ------------------------------------------------------------------------------------------------------------------ Total revenues $ 192,491 176,507 551,756 480,141 Operating expenses 154,527 142,105 447,177 390,328 Selling, general and administrative 23,579 21,551 68,122 60,516 - ------------------------------------------------------------------------------------------------------------------ Total costs and expenses 178,106 163,656 515,299 450,844 - ------------------------------------------------------------------------------------------------------------------ Other operating income (expense) 1,648 (588) 1,478 585 - ------------------------------------------------------------------------------------------------------------------ Operating profit: North America (United States and Canada) $ 9,292 8,226 23,383 20,752 International 6,741 4,037 14,552 9,130 - ------------------------------------------------------------------------------------------------------------------ Total operating profit $ 16,033 12,263 37,935 29,882 - ------------------------------------------------------------------------------------------------------------------ Depreciation and amortization $ 6,522 5,757 18,259 16,253 - ------------------------------------------------------------------------------------------------------------------ Cash capital expenditures $ 8,514 4,234 24,518 15,710 - ------------------------------------------------------------------------------------------------------------------ Brink's worldwide consolidated revenues totaled $192.5 million in the third quarter of 1996 compared with $176.5 million in the third quarter of 1995. Brink's operating profit of $16.0 million represented a $3.8 million (31%) increase over the $12.3 million operating profit reported in the prior year quarter. Other operating income increased $2.2 million to $1.6 million, from a prior year quarter net loss of $0.6 million. Revenues from North American operations (United States and Canada) increased $9.1 million, or 9%, to $106.2 million in the 1996 third quarter from $97.1 million in the prior year quarter. North American operating profit increased $1.1 million, or 13%, to $9.3 million in the current year quarter from $8.2 million in the third quarter of 1995. The operating profit improvement was primarily due to improved armored car operations, which includes ATM servicing, and money processing and reflects operating efficiencies. Revenues from international subsidiaries increased $6.9 million to $86.3 million in the 1996 third quarter from $79.4 million in the 1995 quarter. Substantially all the increase in international revenues was due to the consolidation of the results of Brink's Colombia, in which Brink's increased its ownership from 47% to 51% during the third quarter of 1995. Operating profits from international subsidiaries and minority-owned affiliates amounted to $6.7 million in the current year quarter compared to $4.0 million in the prior year third quarter. The earnings increase for the third quarter of 1996 reflected higher operating profits in Latin America which more than offset lower results in Europe, primarily Holland. Latin America's increase in operating profits reflects a $1.2 million benefit from the consolidation of Colombia's operating profits. Brazil's (100% owned) operating profits amounted to $1.7 million in the third quarter of 1996, compared to $1.9 million in the third quarter of 1995. The $1.1 million in equity earnings generated by Brink's Mexican affiliate (20% owned) was an improvement over the $1.2 million loss recorded in the third quarter of 1995, as the benefits of workforce reductions, cost controls and operational improvements continue to be realized. Brink's worldwide consolidated revenues totaled $551.8 million in the first nine months of 1996 compared with $480.1 million in the first nine months of 1995. Brink's operating profit of $37.9 million in the first nine months of 1996 represented an $8.1 million (27%) increase over the $29.9 million operating profit reported in the prior year period. The revenue increase of $71.6 million (15%) in the first nine months of 1996 was only partially offset by a corresponding increase in operating expenses and selling, general and administrative expenses of $64.5 million (14%). Other operating income increased $0.9 million to $1.5 million, from $0.6 million in the prior year. -- 11

Revenues from North American operations (United States and Canada) increased $30.2 million, or 11%, to $308.3 million in the first nine months of 1996 from $278.1 million in the same period of 1995. North American operating profit increased $2.6 million (13%) to $23.4 million in the current year period from $20.8 million in the same period of 1995. The operating profit improvement for the nine months of 1996 primarily resulted from improved armored car operations, which includes ATM servicing, and money processing and reflects operating efficiencies. Revenues from international subsidiaries increased $41.4 million to $243.5 million in the first nine months of 1996 from $202.1 million in the first nine months of 1995. Consolidation of the results of Brink's Colombia accounted for approximately half of the increase in international revenues for the nine-month comparative period. Operating profits from international subsidiaries and minority-owned affiliates amounted to $14.6 million in the current year period compared to $9.1 million in the prior year period. Higher operating profits in Latin America more than offset lower results in Europe, primarily France and Holland. Latin America's increase in operating profits includes a $3.1 million benefit from the consolidation of the results of Brink's Colombia. The consolidation of this now 51% owned subsidiary had a de minimus effect on the Brink's Group net income. Brazil (100% owned) achieved increases in revenue and operating profit of $10.7 million and $1.9 million, respectively, for the first nine months of 1996 compared to the same period in 1995. Revenues for Brink's Brazil were $89.6 million and $79.0 million for the first nine months of 1996 and 1995, respectively, and operating profits were $4.7 million and $2.8 million for the first nine months of 1996 and 1995, respectively. Equity in earnings from Brink's Mexican affiliate (20% owned) amounted to $2.1 million compared with a $2.2 million loss recorded in the first nine months of 1995. BHS - --- The following is a table of selected financial data for BHS on a comparative basis: Three Months Nine Months Ended September 30 Ended September 30 (In thousands) 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------------------- Revenues $ 39,531 32,451 114,881 93,823 Operating expenses 20,452 16,051 59,810 48,715 Selling, general and administrative 7,570 6,014 21,059 16,406 - ------------------------------------------------------------------------------------------------------------------ Total costs and expenses 28,022 22,065 80,869 65,121 - ------------------------------------------------------------------------------------------------------------------ Operating profit $ 11,509 10,386 34,012 28,702 - ------------------------------------------------------------------------------------------------------------------ Depreciation and amortization $ 6,936 5,469 20,745 15,889 - ------------------------------------------------------------------------------------------------------------------ Cash capital expenditures $ 14,702 11,882 44,751 31,023 - ------------------------------------------------------------------------------------------------------------------ Annualized recurring revenues (a) $ 121,254 100,862 - ------------------------------------------------------------------------------------------------------------------ Number of subscribers: Beginning of period 412,591 346,540 378,659 318,029 Installations 23,327 20,580 72,030 58,942 Disconnects (8,125) (5,917) (22,896) (15,768) - ------------------------------------------------------------------------------------------------------------------ End of period 427,793 361,203 427,793 361,203 - ------------------------------------------------------------------------------------------------------------------ (a) Annualized recurring revenue is calculated based on the number of subscribers at period end multiplied by the average fee per subscriber received in the last month of the period for monitoring, maintenance and related services. -- 12

Revenues for BHS increased by $7.1 million (22%) to $39.5 million in the third quarter of 1996 from $32.5 million in the 1995 quarter. In the first nine months of 1996, revenues for BHS increased by $21.1 million (22%) to $114.9 million from $93.8 million in the first nine months of 1995. The increase in revenues was predominantly from higher ongoing monitoring and services revenues, caused by an 18% growth in the subscriber base for the nine months. As a result of such growth, annualized recurring revenues in force at the end of the third quarter of 1996 grew 20% over the amount in effect at the end of the third quarter of 1995. The total amount of installation revenue in the third quarter and first nine months of 1996 also grew by 24% and 26%, respectively, over the amount recorded in the same periods of 1995, largely as a result of the increased volume of installations. Revenue per installation decreased from amounts achieved in the first half of this year due to the competitive environment in the marketplace. Operating profit of $11.5 million in the third quarter of 1996 represented an increase of $1.1 million (11%) compared to the $10.4 million earned in the 1995 third quarter. In the first nine months of 1996, operating profit increased $5.3 million (19%) to $34.0 million from $28.7 million earned in the first nine months of 1995. The increase in operating profit largely stemmed from the growth in the subscriber base and higher average monitoring and services revenues, somewhat offset by higher depreciation and increased account servicing and administrative expenses, which are a consequence of the larger subscriber base. In addition, installation and marketing costs incurred and expensed during the third quarter increased by $0.9 million from the prior year period. The subscriber base on September 30, 1996, totaled 427,793 customers, 18% higher than the balance at the end of the third quarter of 1995. Annualized recurring revenues amounted to $121.3 million at September 30, 1996, 20% higher than September 30, 1995. The favorable change reflects the increased subscriber base as well as higher average monthly revenues, principally generated by customer service contracts. Coal - ---- The following is a table of selected financial data for the Coal operations on a comparative basis: Three Months Nine Months Ended September 30 Ended September 30 (In thousands) 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------------------ Net sales $ 172,603 173,985 507,967 545,255 Cost of sales 164,251 164,032 520,367 532,977 Selling, general and administrative 4,985 5,394 19,366 17,096 Restructuring and other charges, including litigation accrual - - (35,650) - - ------------------------------------------------------------------------------------------------------------------ Total costs and expenses 169,236 169,426 504,083 550,073 - ------------------------------------------------------------------------------------------------------------------ Other operating income 2,026 3,516 11,076 20,014 - ------------------------------------------------------------------------------------------------------------------ Operating profit $ 5,393 8,075 14,960 15,196 - ------------------------------------------------------------------------------------------------------------------ Coal sales (tons): Metallurgical 1,979 1,950 5,978 6,583 Utility and industrial 3,837 3,943 11,240 12,471 - ------------------------------------------------------------------------------------------------------------------ Total coal sales 5,816 5,893 17,218 19,054 - ------------------------------------------------------------------------------------------------------------------ Production/purchased (tons): Deep 924 984 2,977 3,025 Surface 2,764 3,143 8,351 10,272 Contract 408 459 1,261 1,500 - ------------------------------------------------------------------------------------------------------------------ 4,096 4,586 12,589 14,797 Purchased 1,380 1,289 4,365 4,791 - ------------------------------------------------------------------------------------------------------------------ Total 5,476 5,875 16,954 19,588 - ------------------------------------------------------------------------------------------------------------------ -- 13

Coal operations generated an operating profit of $5.4 million in the third quarter of 1996, compared to $8.1 million generated in the 1995 third quarter. Included in the current quarter's results is a $0.7 million reduction in expenses resulting from the recently enacted Commonwealth of Virginia law providing refundable credits for coal produced in Virginia. The third quarter of 1995 included a pretax gain of $1.5 million for the disposition of highwall mining equipment. Coal operations had an operating profit of $15.0 million in the first nine months of 1996 compared to an operating profit of $15.2 million in the prior year period. Operating profit for the first nine months of 1996 included a benefit from the Virginia tax credit of $2.4 million, and a benefit of $35.7 million from the settlement of the Evergreen lawsuit at an amount lower than previously accrued in 1993. These benefits were mostly offset by a $27.8 million charge related to the implementation of a new accounting standard regarding the impairment of long-lived assets (discussed further below). The charge is included in cost of sales ($24.2 million) and selling, general and administrative expenses ($3.6 million). Operating profit in the first nine months of 1995 included a pretax gain of $9.8 million from the sale of coal assets. The operating profit of Coal operations, excluding the effects of the Evergreen settlement and the implementation of SFAS 121, is analyzed as follows: Three Months Nine Months (In thousands, Ended September 30 Ended September 30 except per ton amounts) 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------------------ Net coal sales $ 170,301 173,032 502,759 543,265 Current production cost of coal sold 156,027 154,341 471,050 507,519 - ------------------------------------------------------------------------------------------------------------------ Coal margin 14,274 18,691 31,709 35,746 Non-coal margin 620 33 1,476 339 Other operating income (net) 2,026 3,516 10,930 20,014 - ------------------------------------------------------------------------------------------------------------------ Margin and other income 16,920 22,240 44,115 56,099 - ------------------------------------------------------------------------------------------------------------------ Other costs and expenses: Idle equipment and closed mines 266 3,933 729 8,493 Inactive employee cost 6,275 4,838 20,758 15,314 General and administrative 4,986 5,394 15,478 17,096 - ------------------------------------------------------------------------------------------------------------------ Total other costs and expenses 11,527 14,165 36,965 40,903 - ------------------------------------------------------------------------------------------------------------------ Operating profit (adjusted as stated above) $ 5,393 8,075 7,150 15,196 - ------------------------------------------------------------------------------------------------------------------ Coal margin per ton: Realization $ 29.28 29.36 29.20 28.51 Current production cost of coal sold 26.83 26.19 27.36 26.63 - ------------------------------------------------------------------------------------------------------------------ Coal margin $ 2.45 3.17 1.84 1.88 - ------------------------------------------------------------------------------------------------------------------ Sales volume of 5.8 million tons in the 1996 third quarter was 0.1 million tons less than the 5.9 million tons sold in the prior year quarter. Third quarter steam coal sales which represent 66% of the total volume of coal sales, decreased by 0.1 million tons, to 3.8 million tons. Total coal margin of $14.3 million for the third quarter of 1996 represented a decrease of $4.4 million from the comparable period in 1995. The decrease in coal margin reflects a $.72 per ton (23%) decrease in the average coal margin and a 1% decrease in sales volume. Coal margin per ton decreased to $2.45 per ton in the current quarter from $3.17 per ton for the comparable 1995 quarter as a $0.08 per ton (0.3%) decrease in realization was augmented by a $0.64 per ton increase in current production cost of coal sold. The decrease in realization was primarily attributable to lower steam coal pricing. However, while steam coal spot pricing remains at low levels, the majority of Coal operations' steam coal sales were, and continue to be, sold under long term contracts at prices which are somewhat higher than steam coal spot prices. The current production cost of coal sold increase of $0.64 per ton to $26.83 per ton in the third quarter of 1996 over the third quarter of 1995 was due to higher surface mine and purchased coal costs, partially offset by lower company deep mine and contract coal costs. -- 14

Production in the 1996 third quarter totaled 4.1 million tons, an 11% decrease compared to the 4.6 million tons produced in the 1995 third quarter. The decline primarily reflected lower surface mine production, which was caused by exhaustion of reserves at certain mines, idling of a mine subsequent to the third quarter of 1995 and the sale of Coal operations' Ohio operations at the end of 1995. Third quarter surface production accounted for 67% and 69% of total production in 1996 and 1995, respectively. Overall productivity of 38.1 tons per man day represented a 3% decrease from 1995 levels as decreases in surface mine productivity more than offset increases in deep mine productivity. The Coal operations will reactivate a coal preparation and loading facility and open three new underground coal mines in southwest Virginia. When in full operation in early 1997, the mines will produce approximately 1.0 million tons annually of premium grade metallurgical coal. Based on current reserve estimates, it is anticipated that the mines will have an operating life of six to eight years. Non-coal margin in the third quarter of 1996 increased by $0.6 million from the third quarter of 1995. The increase reflected the impact of a favorable change in natural gas prices. Other operating income, reflecting sales of properties and equipment and third party royalties, amounted to $2.0 million in the third quarter of 1996, $1.5 million less than the third quarter of 1995. The higher level of income recorded in the 1995 third quarter reflects $1.5 million of income generated from the disposition of highwall mining equipment. Idle equipment and closed mine costs decreased by $3.7 million in the 1996 third quarter. Idle equipment expenses were reduced from the prior year level as a result of Coal operations' improved equipment management program. Inactive employee costs, which primarily represent long term employee liabilities for pension and retiree medical cost, increased by $1.4 million to $6.3 million in the third quarter of 1996 primarily due to the use of lower long term interest rates to calculate the present value of the long term liabilities as compared to the 1995 period. Sales volume of 17.2 million tons in the first nine months of 1996 was 1.9 million tons less than the 19.1 million tons sold in the same 1995 period. Metallurgical coal sales decreased by 0.6 million tons (9%) to 6.0 million tons and steam coal sales decreased by 1.2 million tons (10%) to 11.2 million tons compared to the prior year period. Steam coal sales represented 65% of the total sales volume for the nine months ended 1996 and 1995. Total coal margin of $31.7 million for the first nine months of 1996 represented a decrease of $4.0 million from the comparable period in 1995. The decline in coal margin reflects a $0.73 per ton (3%) increase in the current production cost of coal sold which was partially offset by a $0.69 per ton (2%) increase in realization. The increase in realization was mostly due to the timing of the improved metallurgical pricing for the contract year that began in April 1, 1995, the full effect of which was not realized until after the first half of 1995. The current production cost of coal sold for the first nine months of 1996 increased by $0.73 per ton compared to the prior year period, as higher company surface mine and purchased coal costs were only partially offset by lower company deep mine and contract coal costs. Production for the year-to-date 1996 period totaled 12.6 million tons, a decrease of 15% from the comparable 1995 period. Surface mine production accounted for 66% and 69% of the total volume produced in the 1996 and 1995 periods, respectively. Productivity of 37.2 tons per man day represents a slight decrease from the 1995 period. Non-coal margin for the first nine months of 1996 increased by $1.1 million from the first nine months of 1995 reflecting higher gas prices. Other operating income, including litigation settlements, sales of properties and equipment and third party royalties, amounted to $10.9 million in the third quarter of 1996, $9.1 million less than the third quarter of 1995. The higher level of income recorded in the 1995 period reflects $9.8 million income from the sale of coal assets. -- 15

Idle equipment and closed mine costs decreased by $7.8 million in the first nine months of 1996. Idle equipment expenses were reduced from the prior period level as a result of Coal operations' improved equipment management program. Inactive employee costs, which primarily represent long term employee liabilities for pension and retiree medical cost, increased by $5.4 million to $20.8 million in the first nine months of 1996. The unfavorable variance is due to the use of lower long term interest rates to calculate the present value of the long term liabilities in 1996. In addition, the 1995 nine month results include a benefit of $2.5 million from a favorable litigation decision. In 1988, the trustees of certain pension and benefit trust funds (the "Trust Funds") established under collective bargaining agreements with the United Mine Workers of America ("UMWA") brought an action (the "Evergreen Case") against the Company and a number of its coal subsidiaries, claiming that the defendants were obligated to contribute to such Trust Funds in accordance with the provisions of the 1988 and subsequent National Bituminous Coal Wage Agreements, to which neither the Company nor any of its subsidiaries was a signatory. In late March 1996, a settlement was reached in the Evergreen Case. Under the terms of the settlement, the coal subsidiaries which had been signatories to earlier National Bituminous Coal Wage Agreements agreed to make various lump sum payments in full satisfaction of all amounts allegedly due to the Trust Funds through January 31, 1996, to be paid over time as follows: $25.8 million upon dismissal of the Evergreen Case in March 1996 and the remainder of $24.0 million in installments of $7.0 million in August 1996 and $8.5 million in each of 1997 and 1998. The first payment was entirely funded through an escrow account previously established by the Coal operations. The second payment of $7.0 million was paid in the third quarter of 1996 and was funded through cash provided by operating activities. In addition, the coal subsidiaries agreed to future participation in the UMWA 1974 Pension Plan. Separate lawsuits against each of the UMWA and the Bituminous Coal Operators Association, previously reported, have also been dismissed. As a result of the settlement of these cases at an amount lower than previously accrued in 1993, the Company recorded a pretax benefit of $35.7 million ($23.2 million after tax) in the first quarter of 1996 in its consolidated financial statements. As of January 1, 1996, the Company implemented a new accounting standard, Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires companies to review long-lived assets and certain identifiable intangibles to be held and used by an entity for impairment whenever circumstances indicate that the carrying amount for an asset may not be recoverable. In accordance with SFAS No. 121, the Company grouped its long-lived assets at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets, and determined the recoverability of such assets by comparing the sum of the expected undiscounted future cash flows with the carrying amount of the assets. The impact of adopting SFAS No. 121 resulted in a pretax charge to earnings as of January 1, 1996 for the Company's Coal operations of $27.8 million ($18.1 million after tax), of which $24.2 million was included in cost of sales and $3.6 million was included in selling, general and administrative expenses. Assets for which the impairment loss was recognized consisted of property, plant and equipment, advanced royalties and goodwill. These assets primarily related to mines scheduled for closure in the near term and idled facilities and related equipment. Based on current mining plans, geological conditions, and current assumptions related to future realization and costs, the sum of the expected undiscounted future cash flows was less than the carrying amount of the assets, and accordingly, an impairment loss was recognized. The loss was calculated based on the excess of the carrying value of the assets over the present value of estimated expected future cash flows, using a discount rate commensurate with the risks involved. -- 16

Coal operations continued cash funding for charges recorded in prior years for facility closure costs recorded as restructuring and other charges. The following table analyzes the changes in liabilities during the first nine months of 1996 for such costs: Employee Mine Termination, Leased and Medical Machinery Plant and and Closure Severance Equipment Costs Costs Total - --------------------------------------------------------------------------------------------------------- Balance as of December 31, 1995 $ 1,218 28,983 36,077 66,278 Payments 652 4,218 3,369 8,239 - --------------------------------------------------------------------------------------------------------- Balance as of September 30, 1996 $ 566 24,765 32,708 58,039 - --------------------------------------------------------------------------------------------------------- In April 1996, the Commonwealth of Virginia enacted into law the "Coalfield Employment Enhancement Tax Credit." The new law, which is effective from January 1, 1996 through December 31, 2001, provides Virginia coal producers with a refundable credit against taxes imposed by the Commonwealth for coal produced in Virginia. The credit ranges from $.40 per ton for surface coal to $1 to $2 per ton of underground coal mined, depending upon seam thickness, with certain modifications to the surface and deep mined credit rates based on employment levels. The credit can be utilized under a predetermined schedule beginning with the 1999 tax year through the 2008 tax year. At current production levels, Coal operations estimates it will generate approximately $4.0 million in tax credits in 1996 to be realized in future years according to the regulations. Mineral Ventures - ---------------- The following is a table of selected financial data for Mineral Ventures on a comparative basis: Three Months Nine Months (Dollars in thousands, except Ended September 30 Ended September 30 per ounce data) 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------------------ Net sales $ 4,592 3,717 14,748 12,398 Cost of sales 3,657 3,229 10,761 9,084 Selling, general and administrative 1,045 1,047 2,784 2,624 - ------------------------------------------------------------------------------------------------------------------ Total costs and expenses 4,702 4,276 13,545 11,708 Other operating (expense) income, net (214) (257) 222 (15) - ------------------------------------------------------------------------------------------------------------------ Operating (loss) profit $ (324) (816) 1,425 675 - ------------------------------------------------------------------------------------------------------------------ Stawell Gold Mine: Mineral Ventures's 50% direct share: Ounces sold 10,775 8,737 35,375 30,229 Ounces produced 10,756 8,918 34,738 30,206 - ------------------------------------------------------------------------------------------------------------------ Average per ounce sold (US$): Realization $ 424 413 415 405 Cash cost $ 321 293 289 358 - ------------------------------------------------------------------------------------------------------------------ The operating loss from Mineral Ventures' operations, primarily a 67% direct and indirect interest in the Stawell gold mine in western Victoria, Australia, amounted to $0.3 million in the third quarter, compared to an operating loss of $0.8 million in the third quarter of 1995. This reduction in operating loss reflects a 23% increase in ounces sold, higher realized gold prices per ounce sold, partially offset by 10% higher costs than the prior year period. Operating costs in the 1996 third quarter were negatively impacted by four lost-time accidents, two late in the second quarter, that resulted in production shortfalls and higher operating cost as compared to the first half of 1996 and the 1995 third quarter. In the third quarter of 1995, costs and production were negatively impacted by adverse geological conditions. Operating profit for the first nine months increased $0.7 million to $1.4 million from the comparable period in 1995 as volume, price and cost all improved from the prior year. -- 17

During the second quarter, the Australian joint venture in which Mineral Ventures owns a 34% direct interest, formally announced that the Silver Swan nickel deposit in Australia (50% owned by the Australian joint venture) will be developed as an underground mine with production expected to commence in mid-1997. As of September 30, 1996, the main production shaft has reached 809 meters. In addition, exploration drilling has indicated the presence of a previously unknown area of high grade mineralization (approximately 8 -10% nickel) some 100 meters to the south of Silver Swan and 750 meters below the surface. However, at this time, sufficient data has not been developed to determine whether this area will be commercially significant. Foreign Operations - ------------------ A portion of the Company's financial results is derived from activities in several foreign countries, each with a local currency other than the U.S. dollar. Since the financial results of the Company are reported in U.S. dollars, they are affected by the changes in the value of the various foreign currencies in relation to the U.S. dollar. The Company's international activity is not concentrated in any single currency, which limits the risks of foreign rate fluctuations. In addition, foreign currency rate fluctuations may adversely affect transactions which are denominated in currencies other than the functional currency. The Company routinely enters into such transactions in the normal course of its business. Although the diversity of its foreign operations limits the risks associated with such transactions, the Company uses foreign exchange forward contracts to hedge the risks associated with certain transactions denominated in currencies other than the functional currency. Realized and unrealized gains and losses on these contracts are deferred and recognized as part of the specific transaction hedged. In addition, cumulative translation adjustments relating to operations in countries with highly inflationary economies are included in net income, along with all transaction gains or losses for the period. Subsidiaries in Brazil operate in such a highly inflationary economy. Additionally, current conditions in Mexico where the Brink's Group has an affiliate (20% owned), indicate that that economy may be considered highly inflationary by early 1997. Other Operating Income - ---------------------- Other operating income includes the Company's share of net income of unconsolidated affiliates, primarily equity affiliates of Brink's, royalty income and gains and losses from sales of coal assets. Other operating income in the third quarter of 1996 increased $0.5 million to $3.7 million from $3.1 million in the third quarter of 1995, and in the first nine months of 1996 decreased $8.7 million to $13.7 million from $22.4 million in the first nine months of 1995. The decrease in the first nine months of 1996 from the comparable period of 1995 is largely due to lower gains from the sales of coal assets as results in the first nine months of 1995 included an $8.3 million gain on the sale of coal reserves and $1.5 million gain on the disposition of highwall mining equipment. Brink's share of the reported results of its equity affiliates for the third quarter and first nine months of 1996 increased $2.2 million and $1.0 million, respectively, compared with the same periods for the prior year. The results of Brink's equity affiliates in the third quarter and first nine months of 1995 included $0.2 million and $1.2 million, respectively, in equity income from Colombia which became a consolidated subsidiary during the third quarter of 1995, subsequent to an additional investment bringing Brink's ownership to a majority interest in the operation. The consolidation of this now 51% owned subsidiary had a de minimus effect on the Brink's Group's net income. Corporate Expenses - ------------------ The Company's corporate office was relocated to Richmond, Virginia during September 1996. The costs of this move, including moving expenses, employee relocation, severance pay and temporary employee costs, amounted to $2.9 million year-to-date with $2.7 million in the third quarter. -- 18

Interest Expense - ---------------- Interest expense decreased $0.3 million to $3.4 million in the third quarter of 1996 from $3.7 million in the prior year quarter, and in the first nine months of 1996 increased $0.1 million to $10.5 million from $10.4 million in the first nine months of 1995. Other Income (Expense), Net - --------------------------- Other net expense for the third quarter of 1996 increased $0.7 million to a net expense of $2.5 million from a net expense of $1.8 million in the third quarter of 1995, and in the first nine months of 1996 increased $2.9 million to a net expense of $6.9 million from a net expense of $4 million in the same period a year earlier. Higher minority interest expense at Brink's contributed to the increased expense for the current year quarter and nine month periods. In addition, other net expense in the first nine months of 1996 includes a loss for the termination of an overseas sublease agreement at Burlington. FINANCIAL CONDITION - ------------------- Cash Provided by Operations - --------------------------- Cash provided by operating activities during the first nine months of 1996 totaled $124.9 million compared with $89.3 million in the first nine months of 1995. Net income, noncash charges and changes in operating assets and liabilities in the first nine months of 1996 were significantly affected by two non-recurring items, a benefit from the settlement of the Evergreen case at an amount less than originally accrued and a charge related to the implementation of SFAS 121; these items had no effect on cash generated by operations except that the second settlement payment of $7.0 million was paid from operating cash in the 1996 third quarter. The initial payment of $25.8 million related to the Evergreen case settlement was entirely funded by an escrow account previously established by the Company. The amount previously escrowed and accrued was included in "Short-term investments" and "Accrued liabilities" on the Company's balance sheet. Capital Expenditures - -------------------- Cash capital expenditures for the first nine months of 1996 totaled $116.3 million, $35.0 million higher than in the comparable period in 1995. Of the 1996 amount, $25.7 million was spent by Burlington, $24.5 million was spent by Brink's, $44.8 million was spent by BHS, $14.1 million was spent by Coal, $2.0 million was spent by Mineral Ventures and $5.2 million consisted of corporate expenditures, the majority of which related to the purchase of the Company's new corporate headquarters. For the full year 1996, company-wide capital expenditures are projected to be between $165.0 million and $180.0 million. The foregoing amounts exclude equipment expenditures that have been or are expected to be financed through capital and operating leases. Increased full-year expenditures in 1996 compared to 1995 are largely attributable to Burlington to support new airfreight stations and implementation of new information systems, BHS resulting from continued expansion of the subscriber base and Brink's in support of business expansion. Other Investing Activities - -------------------------- All other investing activities in the first nine months of 1996 provided net cash of $2.8 million, primarily from the disposal of property, plant and equipment and other investing assets, net of expenditures for aircraft heavy maintenance. Financing - --------- The Company intends to fund its capital expenditure requirements during the remainder of 1996 with anticipated cash flows from operating activities and through operating leases if the latter are financially attractive. Shortfalls, if any, will be financed through the Company's revolving credit agreements or other borrowing arrangements. The Company has a $350 million revolving credit agreement with a syndicate of banks (the "Facility"). The Facility includes a $100 million term loan and also permits additional borrowings, repayments, and reborrowings of up to an aggregate of $250 million. During the second quarter of 1996, the maturity date of both the term loan and revolving credit portion of the Facility was extended to May 31, 2001. As of September 30, 1996, borrowings of $100 million were outstanding under the term loan portion of the Facility and $15.6 million of additional borrowings were outstanding under the remainder of the facility. The Company also maintains agreements with financial institutions whereby it has the right to sell certain coal receivables, with recourse, to those institutions. As of September 30, 1996, no coal receivables were sold under such agreements. -- 19

Debt - ---- Outstanding debt, including borrowings under revolving credit agreements, aggregated $190.7 million at September 30, 1996, up from $177.6 million at year-end 1995. Cash provided from operating activities, other investing activities and the exercise of stock options were not sufficient to fund capital expenditures, dividend payments, purchase of Company stock and the cost of the Brink's Stock proposal, resulting in additional borrowings. Capitalization - -------------- On January 18, 1996, the shareholders of the Company approved the Brink's Stock Proposal, resulting in the modification of the capital structure of the Company to include an additional class of common stock. The outstanding shares of Pittston Services Group Common Stock ("Services Stock") were redesignated as Pittston Brink's Group Common Stock ("Brink's Stock") on a share-for-share basis, and a new class of common stock, designated as Pittston Burlington Group Common Stock ("Burlington Stock"), was distributed on the basis of one-half share of Burlington Stock for each share of Services Stock previously held by shareholders of record on January 19, 1996. The Pittston Brink's Group (the "Brink's Group") consists of the Brink's and BHS operations of the Company. The Pittston Burlington Group (the "Burlington Group") consists of the Burlington operations of the Company. The Pittston Minerals Group (the "Minerals Group") consists of the Coal and Mineral Ventures operations of the Company. The approval of the Brink's Stock Proposal did not result in any transfer of assets and liabilities of the Company or any of its subsidiaries. The Company prepares separate financial statements for the Minerals, Brink's and Burlington Groups in addition to consolidated financial information of the Company. Brink's Stock, Burlington Stock and Pittston Minerals Group Common Stock ("Minerals Stock") were designed to provide shareholders with separate securities reflecting the performance of the Brink's Group, Burlington Group and Minerals Group, respectively, without diminishing the benefits of remaining a single corporation or precluding future transactions affecting any of the Groups. The redesignation of the Company's Services Stock as Brink's Stock and the distribution of Burlington Stock as a result of the approval of the Brink's Stock Proposal and the distribution of Minerals Stock in July 1993 (the "Services Stock Proposal") did not result in any transfer of assets and liabilities of the Company or any of its subsidiaries. Holders of all three classes of stock are shareholders of the Company, which continues to be responsible for all its liabilities. Therefore, financial developments affecting the Brink's Group, the Burlington Group or the Minerals Group that affect the Company's financial condition could affect the results of operations and financial condition of all three Groups. The changes in the capital structure of the Company had no effect on the Company's total capital, except as to expenses incurred in the execution of the Brink's Stock Proposal. Since the approval of the Brink's Stock Proposal including the earlier Services Stock Proposal, capitalization of the Company has been affected by the share activity related to each of the classes of common stock. In November 1995, the Board authorized a revised share repurchase program which allows for the purchase, from time to time, of up to 1,500,000 shares of Brink's Stock, 1,500,000 shares of Burlington Stock and 1,000,000 shares of Minerals stock, not to exceed an aggregate purchase price of $45.0 million. As of September 30, 1996, 20,300 shares of Burlington Stock at a total cost of $0.4 million were purchased under the program. Between October 1, 1996 and November 11, 1996, the Company purchased 47,600 shares of Burlington Stock at a total cost of $0.9 million. In 1994, the Board authorized the purchase from time to time of up to $15 million of the Company's Series C Cumulative Convertible preferred stock. In November 1995, the Board authorized an increase in the remaining authority to $15 million. No share purchases were made in 1995 subsequent to the increased authorization. During the third quarter and the Company purchased 10,320 and 20,920 shares, respectively, of its Series C Cumulative Convertible preferred stock at a total cost of $3.9 million and $7.9 million, respectively. -- 20

Dividends - --------- The Board intends to declare and pay dividends on Brink's Stock, Burlington Stock and Minerals Stock based on the earnings, financial condition, cash flow and business requirements of the Brink's Group, Burlington Group and the Minerals Group, respectively. Since the Company remains subject to Virginia law limitations on dividends and to dividend restrictions in its public debt and bank credit agreements, losses by one Group could affect the Company's ability to pay dividends in respect of stock relating to the other Group. Dividends on Minerals Stock are also limited by the Available Minerals Dividend Amount as defined in the Company's Articles of Incorporation. At September 30, 1996, the Available Minerals Dividend Amount was at least $21.4 million. During the first nine months of 1996 and 1995, the Board declared and the Company paid cash dividends of 48.75 cents per share of Minerals Stock. During the first nine months of 1996, the Board declared and the Company paid dividends of 7.5 cents per share of Brink's Stock and 18 cents per share of Burlington Stock. In the first nine months of 1995, the Board declared and the Company paid dividends of 15 cents per share of Services Stock which has been attributed: 6.9 cents for each share of Brink's Stock and 16.2 cents for each share of Burlington Stock, which reflects the distribution of one-half share of Burlington Stock for each share of Services Stock. Dividends paid on the Series C Cumulative Convertible preferred stock in the first nine months of 1996 and 1995 were $2.9 million and $3.3 million, respectively. Preferred dividends included on the Company's Statement of Operations for the nine months ended September 30, 1996 and 1995, are net of $2.1 million and $1.6 million, respectively, which was the excess of the carrying amount of the preferred stock over the cash paid to holders of the preferred stock. -- 21

Pittston Brink's Group BALANCE SHEETS (In thousands) September 30, December 31, 1996 1995 - -------------------------------------------------------------------------------------------------------------------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 25,575 21,977 Short-term investments, at lower of cost or market 2,223 3,288 Accounts receivable (net of estimated amount uncollectible: 1996 - $4,693; 1995 - $3,756) 121,314 113,790 Receivable - Pittston Minerals Group 1,782 3,945 Inventories, at lower of cost or market 2,616 2,795 Prepaid expenses 12,674 10,380 Deferred income taxes 12,655 13,146 - -------------------------------------------------------------------------------------------------------------------------- Total current assets 178,839 169,321 Property, plant and equipment, at cost (net of accumulated depreciation and amortization: 1996 - $236,394; 1995 - $214,424) 245,286 214,653 Intangibles, net of amortization 28,055 28,893 Investment in and advances to unconsolidated affiliates 29,092 28,406 Deferred pension assets 34,049 33,923 Deferred income taxes 1,517 1,081 Other assets 10,384 8,449 - -------------------------------------------------------------------------------------------------------------------------- Total assets $ 527,222 484,726 - -------------------------------------------------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term borrowings $ 3,541 4,858 Current maturities of long-term debt 2,192 4,117 Accounts payable 29,780 35,460 Accrued liabilities 96,956 86,006 - -------------------------------------------------------------------------------------------------------------------------- Total current liabilities 132,469 130,441 Long-term debt, less current maturities 5,786 5,795 Postretirement benefits other than pensions 3,985 3,475 Workers' compensation and other claims 10,786 11,292 Deferred income taxes 35,056 37,529 Payable - Pittston Minerals Group 6,967 7,844 Minority interests 22,470 21,361 Other liabilities 8,424 8,184 Shareholders' equity 301,279 258,805 - -------------------------------------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity $ 527,222 484,726 - -------------------------------------------------------------------------------------------------------------------------- See accompanying notes to financial statements. -- 22

Pittston Brink's Group STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three Months Nine Months Ended September 30 Ended September 30 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------------------ Operating revenues $ 232,022 208,958 666,637 573,964 Operating expenses 174,979 158,155 506,987 439,043 Selling, general and administrative expenses 33,706 28,708 95,065 80,456 - ------------------------------------------------------------------------------------------------------------------ Total costs and expenses 208,685 186,863 602,052 519,499 - ------------------------------------------------------------------------------------------------------------------ Other operating income (expense), net 1,648 (588) 1,478 585 - ------------------------------------------------------------------------------------------------------------------ Operating profit 24,985 21,507 66,063 55,050 Interest income 719 491 1,708 1,476 Interest expense (424) (527) (1,410) (1,478) Other expense, net (1,462) (1,260) (3,634) (2,502) - ------------------------------------------------------------------------------------------------------------------ Income before income taxes 23,818 20,211 62,727 52,546 Provision for income taxes 7,977 5,598 21,013 16,422 - ------------------------------------------------------------------------------------------------------------------ Net income $ 15,841 14,613 41,714 36,124 - ------------------------------------------------------------------------------------------------------------------ Per common share: Net income $ .41 .38 1.09 .95 - ------------------------------------------------------------------------------------------------------------------ Cash dividends $ .025 .023 .075 .069 - ------------------------------------------------------------------------------------------------------------------ Average shares outstanding 38,264 37,916 38,158 37,914 - ------------------------------------------------------------------------------------------------------------------ See accompanying notes to financial statements. -- 23

Pittston Brink's Group STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Nine months Ended September 30 1996 1995 - ------------------------------------------------------------------------------------------------------------------ Cash flows from operating activities: Net income $ 41,714 36,124 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 39,077 32,219 (Credit) provision for deferred income taxes (1,877) 146 Provision (credit) for pensions, noncurrent 1,189 (289) Provision for uncollectible accounts receivable 3,221 1,987 Equity in earnings of unconsolidated affiliates, net of dividends received (971) 1,642 Other operating, net 4,633 1,781 Change in operating assets and liabilities: Increase in accounts receivable (10,745) (19,308) Decrease (increase) in inventories 180 (578) Increase in prepaid expenses (2,294) (1,777) Increase in accounts payable and accrued liabilities 5,574 10,821 Increase in other assets (3,404) (944) Increase (decrease) in other liabilities 430 (7) Other, net 87 280 - ------------------------------------------------------------------------------------------------------------------ Net cash provided by operating activities 76,814 62,097 - ------------------------------------------------------------------------------------------------------------------ Cash flows from investing activities: Additions to property, plant and equipment (71,146) (46,835) Proceeds from disposal of property, plant and equipment 2,878 2,244 Other, net 1,068 (1,191) - ------------------------------------------------------------------------------------------------------------------ Net cash used by investing activities (67,200) (45,782) - ------------------------------------------------------------------------------------------------------------------ Cash flows from financing activities: Additions to debt 1,882 2,000 Reductions of debt (6,916) (4,080) Payments from (to) - Minerals Group 2,163 (9,936) Proceeds from exercise of stock options 909 1,174 Proceeds from stock purchased by benefit plans 89 395 Dividends paid (2,905) (2,668) Repurchase of common stock - (2,301) Cost of Brink's Stock Proposal (1,238) - - ------------------------------------------------------------------------------------------------------------------ Net cash used by financing activities (6,016) (15,416) - ------------------------------------------------------------------------------------------------------------------ Net increase in cash and cash equivalents 3,598 899 Cash and cash equivalents at beginning of period 21,977 20,226 - ------------------------------------------------------------------------------------------------------------------ Cash and cash equivalents at end of period $ 25,575 21,125 - ------------------------------------------------------------------------------------------------------------------ See accompanying notes to financial statements. -- 24

Pittston Brink's Group NOTES TO FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited) (1) The financial statements of the Pittston Brink's Group (the "Brink's Group") include the balance sheets, results of operations and cash flows of the Brink's, Incorporated ("Brink's") and Brink's Home Security, Inc. ("BHS") operations of The Pittston Company (the "Company"), and a portion of the Company's corporate assets and liabilities and related transactions which are not separately identified with operations of a specific segment. The Brink's Group's financial statements are prepared using the amounts included in the Company's consolidated financial statements. Corporate allocations reflected in these financial statements are determined based upon methods which management believes to be a reasonable and equitable allocation of such expenses and credits. The Company provides holders of Pittston Brink's Group Common Stock ("Brink's Stock") separate financial statements, financial reviews, descriptions of business and other relevant information for the Brink's Group in addition to consolidated financial information of the Company. Holders of Brink's Stock are shareholders of the Company, which is responsible for all its liabilities. Therefore, financial developments affecting the Pittston Burlington Group (the "Burlington Group"), Pittston Minerals Group (the "Minerals Group") or the Brink's Group that affect the Company's financial condition could affect the results of operations and financial condition of all three Groups. Accordingly, the Company's consolidated financial statements must be read in conjunction with the Brink's Group's financial statements. (2) As of January 1, 1992, BHS elected to capitalize categories of costs not previously capitalized for home security installations. The additional costs not previously capitalized consisted of costs for installation labor and related benefits for supervisory, installation scheduling, equipment testing and other support personnel and costs incurred in maintaining facilities and vehicles dedicated to the installation process. The effect of this change in accounting principle was to increase operating profit for the Brink's Group and the BHS segment for the first nine months of 1996 and 1995 by $3,472 and $3,204, respectively, and for the third quarter of 1996 and 1995 by $1,296 and $1,255, respectively. The effect of this change increased net income per common share of the Brink's Group for the first nine months of 1996 and 1995 by $.06 and $.05, respectively, and by $.02 for both the third quarters of 1996 and 1995. (3) Depreciation and amortization of property, plant and equipment in the third quarter and nine month period of 1996 totaled $13,142 ($10,846 in 1995) and $38,118 ($31,097 in 1995), respectively. (4) Cash payments made for interest and income taxes (net of refunds received) were as follows: Third quarter Nine months 1996 1995 1996 1995 - -------------------------------------------------------------------------- Interest $ 414 565 1,416 1,523 - -------------------------------------------------------------------------- Income taxes $ 8,246 2,878 23,791 13,379 - -------------------------------------------------------------------------- During the nine month period ended September 30, 1996 and 1995, capital lease obligations of $1,575 and $150, respectively, were incurred for leases of property, plant and equipment. (5) As of January 1, 1996, the Brink's Group implemented a new accounting standard, Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires companies to review long-lived assets and certain identifiable intangibles to be held and used by an entity for impairment whenever circumstances indicate that the carrying amount for an asset may not be recoverable. SFAS No. 121 requires companies to utilize a two-step approach to determining whether impairment of such assets has occurred and, if so, the amount of such impairment. The adoption of SFAS No. 121 had no impact on the Brink's Group's financial statements as of January 1, 1996. -- 25

(6) Certain prior period amounts have been reclassified to conform to current period financial statement presentation. (7) All adjustments have been made which are, in the opinion of management, necessary for a fair presentation of results of operations for the periods reported herein. All such adjustments are of a normal recurring nature. -- 26

Pittston Brink's Group MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The financial statements of the Pittston Brink's Group (the "Brink's Group") include the balance sheets, results of operations and cash flows of the Brink's, Incorporated ("Brink's") and Brink's Home Security, Inc. ("BHS") operations of the Pittston Company ( the "Company"), and a portion of the Company's corporate assets and liabilities and related transactions which are not separately identified with operations of a specific segment. The Brink's Group's financial statements are prepared using the amounts included in the Company's consolidated financial statements. Corporate allocations reflected in these financial statements are determined based upon methods which management believes to be an equitable allocation of such expenses and credits. The accounting policies applicable to the preparation of the Brink's Group's financial statements may be modified or rescinded at the sole discretion of the Company's Board of Directors (the "Board") without the approval of the shareholders, although there is no intention to do so. The Company provides holders of Pittston Brink's Group Common Stock ("Brink's Stock") separate financial statements, financial reviews, descriptions of business and other relevant information for the Brink's Group in addition to consolidated financial information of the Company. Holders of Brink's Stock are shareholders of the Company, which continues to be responsible for all its liabilities. Therefore, financial developments affecting the Pittston Minerals Group (the "Minerals Group"), the Pittston Burlington Group (the "Burlington Group") or the Brink's Group that affect the Company's financial condition could affect the results of operations and financial condition of all three Groups. Accordingly, the Company's consolidated financial statements must be read in conjunction with the Brink's Group's financial statements. The following discussion is a summary of the key factors management considers necessary in reviewing the Brink's Group's results of operations, liquidity and capital resources. This discussion should be read in conjunction with the financial statements and related notes of the Company. SEGMENT INFORMATION (In thousands) Three Months Nine Months Ended September 30 Ended September 30 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------------------ Revenues: Brink's $ 192,491 176,507 551,756 480,141 BHS 39,531 32,451 114,881 93,823 - ------------------------------------------------------------------------------------------------------------------ Revenues $ 232,022 208,958 666,637 573,964 - ------------------------------------------------------------------------------------------------------------------ Operating profit: Brink's $ 16,033 12,263 37,935 29,882 BHS 11,509 10,386 34,012 28,702 - ------------------------------------------------------------------------------------------------------------------ Segment operating profit 27,542 22,649 71,947 58,584 General corporate expense (2,557) (1,142) (5,884) (3,534) - ------------------------------------------------------------------------------------------------------------------ Operating profit $ 24,985 21,507 66,063 55,050 - ------------------------------------------------------------------------------------------------------------------ -- 27

RESULTS OF OPERATIONS - --------------------- Net income totaled $15.8 million or $.41 per share in the third quarter of 1996 compared with $14.6 million in the third quarter of 1995. Operating profit for the 1996 third quarter increased to $25.0 million from $21.5 million in the third quarter of 1995. The increase in net income and operating profit for the 1996 third quarter compared with the same period of 1995 was attributable to improved operating earnings for both the Brink's and BHS businesses, partially offset by increased general corporate expenses primarily related to the relocation of the Company's corporate headquarters to Richmond, Virginia, which resulted in additional pretax expenses of $1.0 million in the third quarter of 1996. Net income in 1995's third quarter benefited from a lower than normal quarterly tax rate which was required to adjust to the effective nine month tax rate. Revenues for the 1996 third quarter compared to the 1995 third quarter increased $23.1 million or 11% consisting of $16.0 million and $7.1 million from Brink's and BHS, respectively. Operating expenses and selling, general and administrative expenses for the 1996 third quarter increased $21.8 million or 12% compared with the same period last year, of which $14.4 million was from Brink's, $6.0 million was from BHS and $1.4 million was from general corporate expenses. Other net operating income of $1.6 million amounted to a $2.2 million increase from a $0.6 million net loss recorded in the third quarter of 1995. In the first nine months of 1996, net income totaled $41.7 million compared with $36.1 million in the first nine months of 1995. Operating profit for the first nine months of 1996 increased to $66.1 million from $55.1 million in the same period of 1995. The increase in net income and operating profit for the first nine months of 1996 compared with the same period of 1995 was attributable to improved operating earnings for both Brink's and BHS businesses, only partially offset by increased general corporate expenses. Revenues for the first nine months of 1996 increased $92.7 million or 16% compared with the first nine months of 1995, consisting of $71.6 million from Brink's and $21.1 million from BHS. Operating expenses and selling, general and administrative expenses for the first nine months of 1996 increased $82.6 million or 16% compared with the same period last year, which represented $64.5 million from Brink's, $15.7 million from BHS and $2.4 million from general corporate expenses. Other net expense of $3.6 million amounted to a $1.1 million increase from $2.5 million recorded in the first nine months of 1995. Brink's - ------- The following is a table of selected financial data for Brink's on a comparative basis: Three Months Nine Months Ended September 30 Ended September 30 (In thousands) 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------------------ Revenues: North America (United States and Canada) $ 106,156 97,103 308,271 278,084 International 86,335 79,404 243,485 202,057 - ------------------------------------------------------------------------------------------------------------------ Total revenues $ 192,491 176,507 551,756 480,141 Operating expenses 154,527 142,105 447,177 390,328 Selling, general and administrative 23,579 21,551 68,122 60,516 - ------------------------------------------------------------------------------------------------------------------ Total costs and expenses 178,106 163,656 515,299 450,844 - ------------------------------------------------------------------------------------------------------------------ Other operating income (expense) 1,648 (588) 1,478 585 - ------------------------------------------------------------------------------------------------------------------ Operating profit: North America (United States and Canada) $ 9,292 8,226 23,383 20,752 International 6,741 4,037 14,552 9,130 - ------------------------------------------------------------------------------------------------------------------ Total operating profit $ 16,033 12,263 37,935 29,882 - ------------------------------------------------------------------------------------------------------------------ Depreciation and amortization $ 6,522 5,757 18,259 16,253 - ------------------------------------------------------------------------------------------------------------------ Cash capital expenditures $ 8,514 4,234 24,518 15,710 - ------------------------------------------------------------------------------------------------------------------ -- 28

Brink's worldwide consolidated revenues totaled $192.5 million in the third quarter of 1996 compared with $176.5 million in the third quarter of 1995. Brink's operating profit of $16.0 million represented a $3.8 million (31%) increase over the $12.3 million operating profit reported in the prior year quarter. Other operating income increased $2.2 million to $1.6 million, from a prior year quarter net loss of $0.6 million. Revenues from North American operations (United States and Canada) increased $9.1 million, or 9%, to $106.2 million in the 1996 third quarter from $97.1 million in the prior year quarter. North American operating profit increased $1.1 million, or 13%, to $9.3 million in the current year quarter from $8.2 million in the third quarter of 1995. The operating profit improvement was primarily due to improved armored car operations, which includes ATM servicing, and money processing and reflects operating efficiencies. Revenues from international subsidiaries increased $6.9 million to $86.3 million in the 1996 third quarter from $79.4 million in the 1995 quarter. Substantially all the increase in international revenues was due to the consolidation of the results of Brink's Colombia, in which Brink's increased its ownership from 47% to 51% during the third quarter of 1995. Operating profits from international subsidiaries and minority-owned affiliates amounted to $6.7 million in the current year quarter compared to $4.0 million in the prior year third quarter. The earnings increase for the third quarter of 1996 reflected higher operating profits in Latin America which more than offset lower results in Europe, primarily Holland. Latin America's increase in operating profits reflects a $1.2 million benefit from the consolidation of Colombia's operating profits. Brazil's (100% owned) operating profits amounted to $1.7 million in the third quarter of 1996, compared to $1.9 million in the third quarter of 1995. The $1.1 million in equity earnings generated by Brink's Mexican affiliate (20% owned) was an improvement over the $1.2 million loss recorded in the third quarter of 1995, as the benefits of workforce reductions, cost controls and operational improvements continue to be realized. Brink's worldwide consolidated revenues totaled $551.8 million in the first nine months of 1996 compared with $480.1 million in the first nine months of 1995. Brink's operating profit of $37.9 million in the first nine months of 1996 represented an $8.1 million (27%) increase over the $29.9 million operating profit reported in the prior year period. The revenue increase of $71.6 million (15%) in the first nine months of 1996 was only partially offset by a corresponding increase in operating expenses and selling, general and administrative expenses of $64.5 million (14%). Other operating income increased $0.9 million to $1.5 million, from $0.6 million in the prior year. Revenues from North American operations (United States and Canada) increased $30.2 million, or 11%, to $308.3 million in the first nine months of 1996 from $278.1 million in the same period of 1995. North American operating profit increased $2.6 million (13%) to $23.4 million in the current year period from $20.8 million in the same period of 1995. The operating profit improvement for the nine months of 1996 primarily resulted from improved armored car operations, which includes ATM servicing, and money processing and reflects operating efficiencies. Revenues from international subsidiaries increased $41.4 million to $243.5 million in the first nine months of 1996 from $202.1 million in the first nine months of 1995. Consolidation of the results of Brink's Colombia accounted for approximately half of the increase in international revenues for the nine-month comparative period. Operating profits from international subsidiaries and minority-owned affiliates amounted to $14.6 million in the current year period compared to $9.1 million in the prior year period. Higher operating profits in Latin America more than offset lower results in Europe, primarily France and Holland. Latin America's increase in operating profits includes a $3.1 million benefit from the consolidation of the results of Brink's Colombia. The consolidation of this now 51% owned subsidiary had a de minimus effect on the Brink's Group net income. Brazil (100% owned) achieved increases in revenue and operating profit of $10.7 million and $1.9 million, respectively, for the first nine months of 1996 compared to the same period in 1995. Revenues for Brink's Brazil were $89.6 million and $79.0 million for the first nine months of 1996 and 1995, respectively, and operating profits were $4.7 million and $2.8 million for the first nine months of 1996 and 1995, respectively. Equity in earnings from Brink's Mexican affiliate (20% owned) amounted to $2.1 million compared with a $2.2 million loss recorded in the first nine months of 1995. -- 29

BHS - --- The following is a table of selected financial data for BHS on a comparative basis: Three Months Nine Months Ended September 30 Ended September 30 (In thousands) 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------------------ Revenues $ 39,531 32,451 114,881 93,823 Operating expenses 20,452 16,051 59,810 48,715 Selling, general and administrative 7,570 6,014 21,059 16,406 - ------------------------------------------------------------------------------------------------------------------ Total costs and expenses 28,022 22,065 80,869 65,121 - ------------------------------------------------------------------------------------------------------------------ Operating profit $ 11,509 10,386 34,012 28,702 - ------------------------------------------------------------------------------------------------------------------ Depreciation and amortization $ 6,936 5,469 20,745 15,889 - ------------------------------------------------------------------------------------------------------------------ Cash capital expenditures $ 14,702 11,882 44,751 31,023 - ------------------------------------------------------------------------------------------------------------------ Annualized recurring revenues (a) $ 121,254 100,862 - ------------------------------------------------------------------------------------------------------------------ Number of subscribers: Beginning of period 412,591 346,540 378,659 318,029 Installations 23,327 20,580 72,030 58,942 Disconnects (8,125) (5,917) (22,896) (15,768) - ------------------------------------------------------------------------------------------------------------------ End of period 427,793 361,203 427,793 361,203 - ------------------------------------------------------------------------------------------------------------------ (a) Annualized recurring revenue is calculated based on the number of subscribers at period end multiplied by the average fee per subscriber received in the last month of the period for monitoring, maintenance and related services. Revenues for BHS increased by $7.1 million (22%) to $39.5 million in the third quarter of 1996 from $32.5 million in the 1995 quarter. In the first nine months of 1996, revenues for BHS increased by $21.1 million (22%) to $114.9 million from $93.8 million in the first nine months of 1995. The increase in revenues was predominantly from higher ongoing monitoring and services revenues, caused by an 18% growth in the subscriber base for the nine months. As a result of such growth, annualized recurring revenues in force at the end of the third quarter of 1996 grew 20% over the amount in effect at the end of the third quarter of 1995. The total amount of installation revenue in the third quarter and first nine months of 1996 also grew by 24% and 26%, respectively, over the amount recorded in the same periods of 1995, largely as a result of the increased volume of installations. Revenue per installation decreased from amounts achieved in the first half of this year due to the competitive environment in the marketplace. Operating profit of $11.5 million in the third quarter of 1996 represented an increase of $1.1 million (11%) compared to the $10.4 million earned in the 1995 third quarter. In the first nine months of 1996, operating profit increased $5.3 million (19%) to $34.0 million from $28.7 million earned in the first nine months of 1995. The increase in operating profit largely stemmed from the growth in the subscriber base and higher average monitoring and services revenues, somewhat offset by higher depreciation and increased account servicing and administrative expenses, which are a consequence of the larger subscriber base. In addition, installation and marketing costs incurred and expensed during the third quarter increased by $0.9 million from the prior year period. The subscriber base on September 30, 1996, totaled 427,793 customers, 18% higher than the balance at the end of the third quarter of 1995. Annualized recurring revenues amounted to $121.3 million at September 30, 1996, 20% higher than September 30, 1995. The favorable change reflects the increased subscriber base as well as higher average monthly revenues, principally generated by customer service contracts. -- 30

Foreign Operations - ------------------ A portion of the Brink's Group's financial results is derived from activities in several foreign countries, each with a local currency other than the U.S. dollar. Because the financial results of the Brink's Group are reported in U.S. dollars, they are affected by the changes in the value of the various foreign currencies in relation to the U.S. dollar. The Brink's Group's international activity is not concentrated in any single currency, which limits the risks of foreign currency rate fluctuations. In addition, foreign currency rate fluctuations may adversely affect transactions which are denominated in currencies other than the functional currency. The Brink's Group routinely enters into such transactions in the normal course of its business. Although the diversity of its foreign operations limits the risks associated with such transactions, the Brink's Group uses foreign exchange forward contracts to hedge the risks associated with certain transactions denominated in currencies other than the functional currency. Realized and unrealized gains and losses on these contracts are deferred and recognized as part of the specific transaction hedged. Cumulative translation adjustments relating to operations in countries with highly inflationary economies are included in net income, along with all transaction gains or losses for the period. A subsidiary in Brazil operates in such a highly inflationary economy. Additionally, current conditions in Mexico where the Brink's Group has an affiliate (20% owned), indicate that that economy may be considered highly inflationary by early 1997. Additionally, the Brink's Group is subject to other risks customarily associated with doing business in foreign countries, including economic conditions, controls on repatriation of earnings and capital, nationalization, expropriation and other forms of restrictive action by local governments. The future effects, if any, of such risks on the Brink's Group cannot be predicted. Corporate Expenses - ------------------ A portion of the Company's corporate general and administrative expenses and other shared services has been allocated to the Brink's Group based on utilization and other methods and criteria which management believes to be a reasonable and equitable estimate of the costs attributable to the Brink's Group. These allocations were $2.6 million and $1.1 million for the third quarter of 1996 and 1995, respectively and $5.9 million and $3.5 million for the first nine months of 1996 and 1995, respectively. The Company's corporate office was relocated to Richmond, Virginia during September 1996. The costs of this move for the first nine months of 1996, including moving expenses, employee relocation, severance pay and temporary employee costs, amounted to $2.9 million. Approximately $1.0 million of these costs were attributed to the Brink's Group. Other Operating Income (Expense), Net - ------------------------------------- Other net operating income increased $2.2 million to income of $1.6 million in the 1996 third quarter from a loss of $0.6 million in the 1995 third quarter. In the first nine months of 1996, other net operating income amounted to $1.5 million, increasing $0.9 million from other net operating income of $0.6 million in the first nine months of 1995. Other operating income consists primarily of equity earnings of foreign affiliates. These equity earnings, which are primarily attributable to equity affiliates of Brink's, amounted to income of $1.5 million and an expense of $0.7 million for the third quarter of 1996 and 1995, respectively, and income of $1.1 million and $0.1 million in the first nine months of 1996 and 1995, respectively. Increases in Brink's share of equity earnings is partially due to a significant improvement in the earnings of Brink's Mexican affiliate. The results of Brink's equity affiliates in the third quarter and first nine months of 1995 included $0.2 million and $1.2 million, respectively, in equity income from Colombia which became a consolidated subsidiary during the third quarter of 1995, subsequent to an additional investment bringing Brink's ownership to a majority interest in the operation. Other Income (Expense), Net - --------------------------- Other net expense for the third quarter of 1996 increased by $0.2 million to a net expense of $1.5 million from $1.3 million in the third quarter of 1995 and for the first nine months of 1996 increased by $1.1 million to a net expense of $3.6 million from $2.5 million for the first nine months of 1995. The higher level of other expense for the third quarter and first nine months of 1996 primarily reflects increased charges for minority interest, mainly as a result of the consolidation of Brink's Colombia. -- 31

Income Taxes - ------------ The third quarter of 1995 reflected a lower than normal quarterly tax rate required to adjust to the effective nine month tax rate. FINANCIAL CONDITION - ------------------- A portion of the Company's corporate assets and liabilities has been attributed to the Brink's Group based upon utilization of the shared services from which assets and liabilities are generated, which management believes to be equitable and a reasonable estimate. Cash Provided by Operating Activities - ------------------------------------- Cash provided by operating activities amounted to $76.8 million in the first nine months of 1996, representing a $14.7 million favorable change from the prior year period. The increase in cash flow reflects higher net income and noncash charges as well as a reduction in funding requirements for net operating assets and liabilities. Capital Expenditures - -------------------- Cash capital expenditures for the first nine months of 1996 and 1995 totaled $71.1 million and $46.8 million, respectively, excluding equipment expenditures that have been or are expected to be financed through capital and operating leases, and any acquisition expenditures. In 1996, BHS and Brink's spent $44.8 million and $24.5 million, respectively, and $1.8 million was allocated to the Brink's Group for corporate expenditures primarily relating to the purchase of the Company's new corporate office building. Expenditures incurred by BHS in the first nine months of 1996 were primarily for customer installations, representing the expansion in the subscriber base. For the full year of 1996, capital expenditures excluding expenditures that have been or are expected to be financed through capital and operating leases are estimated to be between $95.0 million and $100.0 million. Increased expenditures in 1996 are expected at BHS resulting from continued expansion of the subscriber base, and at Brink's in support of business expansion. Financing - --------- The Brink's Group intends to fund its capital expenditure requirements during the remainder of 1996 primarily with anticipated cash flows from operating activities and through operating and capital leases if the latter are financially attractive. Shortfalls, if any, will be financed through the Company's revolving credit agreements or short-term borrowing arrangements or repayments from the Minerals Group. The Company has a $350 million revolving credit agreement with a syndicate of banks (the "Facility"). The Facility includes a $100 million term loan and also permits additional borrowings, repayments, and reborrowings of up to an aggregate of $250 million. During the second quarter of 1996, the maturity date of both the term loan and revolving credit portion of the Facility was extended to May 31, 2001. Of the total amount outstanding under the Facility at September 30, 1996, none was attributed to the Brink's Group. Debt - ---- Outstanding debt at quarter end totaled $11.5 million, $3.3 million lower than the $14.8 million reported at December 31, 1995. Cash flow from operating activities and a repayment of borrowings by the Minerals Group were more than sufficient to fund investing activities, dividend payments and the cost of the Brink's Stock proposal, as well as enable the Brink's Group to reduce debt. Related Party Transactions - -------------------------- At September 30, 1996, under an interest bearing borrowing arrangement, the Minerals Group owed the Brink's Group $15.8 million, a decrease of $2.1 million from the $17.9 million owed at December 31, 1995. At September 30, 1996, in accordance with the Company's tax allocation policy, the Brink's Group owed the Minerals Group $21.0 million for tax benefits, a decrease of $0.8 million from the $21.8 million owed at December 31, 1995. Of the total amount of tax benefits owed the Minerals Group at September 30, 1996, $14.0 million is expected to be paid within one year. -- 32

Capitalization - -------------- On January 18, 1996, the shareholders of the Company approved the Brink's Stock Proposal, resulting in the modification of the capital structure of the Company to include an additional class of common stock. The outstanding shares of Pittston Services Group Common Stock ("Services Stock") were redesignated as Pittston Brink's Stock on a share-for-share basis, and a new class of common stock, designated as Pittston Burlington Group Common Stock ("Burlington Stock"), was distributed on the basis of one-half share of Burlington Stock for each share of Services Stock previously held by shareholders of record on January 19, 1996. The Brink's Group consists of the Brink's and BHS operations of the Company. The Burlington Group consists of the Burlington operations of the Company. The Minerals Group consists of the Coal and Mineral Ventures operations of the Company. The approval of the Brink's Stock Proposal did not result in any transfer of assets and liabilities of the Company or any of its subsidiaries. The Company prepares separate financial statements for the Brink's, Minerals and Burlington Groups in addition to consolidated financial information of the Company. Brink's Stock, Burlington Stock and Pittston Minerals Group Common Stock ("Minerals Stock") were designed to provide shareholders with separate securities reflecting the performance of the Brink's Group, Burlington Group and Minerals Group, respectively, without diminishing the benefits of remaining a single corporation or precluding future transactions affecting any of the Groups. The redesignation of the Company's Services Stock as Brink's Stock and the distribution of Burlington Stock as a result of the approval of the Brink's Stock Proposal and the distribution of Minerals Stock in July 1993 (the "Services Stock Proposal") did not result in any transfer of assets and liabilities of the Company or any of its subsidiaries. Holders of all three classes of stock are shareholders of the Company, which continues to be responsible for all its liabilities. Therefore, financial developments affecting the Brink's Group, the Burlington Group or the Minerals Group that affect the Company's financial condition could affect the results of operations and financial condition of all three Groups. The changes in the capital structure of the Company had no effect on the Company's total capital, except as to expenses incurred in the execution of the Brink's Stock Proposal. Since the approval of the Brink's Stock Proposal and the earlier Services Stock Proposal, capitalization of the Company has been affected by the share activity related to each of the classes of common stock. In November 1995, the Board authorized, subject to shareholder approval of the Brink's Stock Proposal, a revised share repurchase program which allows for the purchase, from time to time, of up to 1,500,000 shares of Brink's Stock, 1,500,000 shares of Burlington Stock and 1,000,000 shares of Minerals Stock, not to exceed an aggregate purchase price of $45.0 million. As of September 30, 1996, no shares of Brink's Stock were purchased under the program. Between October 1, 1996 and November 11, 1996, the Company purchased 47,600 shares of Burlington Stock at a total cost of $0.9 million. In 1994, the Board authorized the purchase from time to time of up to $15 million of the Company's Series C Cumulative Convertible preferred stock. In November 1995, the Board authorized an increase in the remaining authority to $15 million. No share purchases were made in 1995 subsequent to the increased authorization. During the third quarter and first nine months of 1996, the Company purchased 10,320 and 20,920 shares, respectively, of its Series C Cumulative Convertible preferred stock at a total cost of $3.9 million and $7.9 million, respectively. Dividends - --------- The Board intends to declare and pay dividends on Brink's Stock based on earnings, financial condition, cash flow and business requirements of the Brink's Group. Since the Company remains subject to Virginia law limitations on dividends and to dividend restrictions in its public debt and bank credit agreements, financial developments of the Minerals Group or the Burlington Group could affect the Company's ability to pay dividends in respect of stock relating to the Brink's Group. -- 33

During the first nine months of 1996, the Board declared and the Company paid cash dividends of 7.5 cents per share of Brink's Stock. During the first nine months of 1995, the Board declared and the Company paid cash dividends of 15 cents per share of Services Stock of which 6.9 cents per share was attributed to Brink's Stock. The Company pays an annual cumulative dividend on its Series C Cumulative Convertible preferred stock of $31.25 per share payable quarterly, in cash, in arrears, out of all funds of the Company legally available when, and if declared by the Board of Directors of the Company. Such stock also bears a liquidation preference of $500 per share, plus an amount equal to accrued and unpaid dividends thereon. In the first nine months of 1996 and 1995, dividends paid on the Series C Cumulative Convertible preferred stock were $2.9 million and $3.3 million, respectively. -- 34

Pittston Burlington Group BALANCE SHEETS (In thousands) September 30, December 31, 1996 1995 - ------------------------------------------------------------------------------------------------------------------ (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 24,517 25,847 Accounts receivable (net of estimated amount uncollectible: 1996 - $9,761; 1995 - $10,373) 225,481 219,681 Receivable - Pittston Minerals Group 5,356 5,910 Inventories, at lower of cost or market 2,076 1,684 Prepaid expenses 12,552 13,603 Deferred income taxes 8,265 11,512 - ------------------------------------------------------------------------------------------------------------------ Total current assets 278,247 278,237 Property, plant and equipment, at cost (net of accumulated depreciation and amortization: 1996 - $61,407; 1995 - $56,269) 97,551 72,171 Intangibles, net of amortization 177,472 180,739 Deferred pension assets 9,356 10,427 Deferred income taxes 17,328 12,875 Other assets 14,320 17,628 - ------------------------------------------------------------------------------------------------------------------ Total assets $ 594,274 572,077 - ------------------------------------------------------------------------------------------------------------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term borrowings $ 32,104 32,181 Current maturities of long-term debt 2,739 1,964 Accounts payable 151,756 157,770 Accrued liabilities 72,289 62,311 - ------------------------------------------------------------------------------------------------------------------ Total current liabilities 258,888 254,226 Long-term debt, less current maturities 27,429 26,697 Postretirement benefits other than pensions 3,050 2,713 Deferred income taxes 268 1,996 Payable - Pittston Minerals Group 6,143 8,029 Other liabilities 4,395 6,563 Shareholders' equity 294,101 271,853 - ------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' equity $ 594,274 572,077 - ------------------------------------------------------------------------------------------------------------------ See accompanying notes to financial statements. -- 35

Pittston Burlington Group STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three Months Nine Months Ended September 30 Ended September 30 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------------------ Operating revenues $ 377,656 365,793 1,093,017 1,031,687 Operating expenses 327,242 318,459 958,752 907,696 Selling, general and administrative expenses 32,730 31,491 95,636 89,444 - ------------------------------------------------------------------------------------------------------------------ Total costs and expenses 359,972 349,950 1,054,388 997,140 - ------------------------------------------------------------------------------------------------------------------ Other operating income 224 464 966 1,833 - ------------------------------------------------------------------------------------------------------------------ Operating profit 17,908 16,307 39,595 39,380 Interest income 628 1,026 2,177 3,014 Interest expense (944) (1,238) (2,984) (3,461) Other expense, net (597) (338) (1,939) (862) - ------------------------------------------------------------------------------------------------------------------ Income before income taxes 16,995 15,757 36,849 35,071 Provision for income taxes 6,290 5,233 13,635 12,489 - ------------------------------------------------------------------------------------------------------------------ Net income $ 10,705 10,524 23,214 22,582 - ------------------------------------------------------------------------------------------------------------------ Per common share: Net income $ .56 .55 1.21 1.19 - ------------------------------------------------------------------------------------------------------------------ Cash dividends $ .06 .054 .18 .162 - ------------------------------------------------------------------------------------------------------------------ Average shares outstanding 19,283 18,958 19,161 18,957 - ------------------------------------------------------------------------------------------------------------------ See accompanying notes to financial statements. -- 36

Pittston Burlington Group STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Nine months Ended September 30 1996 1995 - -------------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net income $ 23,214 22,582 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 16,129 14,744 Provision for aircraft heavy maintenance 23,980 19,226 Credit for deferred income taxes (2,757) (2,767) Provision for pensions, noncurrent 1,115 195 Provision for uncollectible accounts receivable 1,841 1,654 Equity in earnings of unconsolidated affiliates, net of dividends received (171) (141) Other operating, net 1,522 714 Change in operating assets and liabilities net of effects of acquisitions: Increase in accounts receivable (7,642) (47,547) (Increase) decrease in inventories (392) 212 Decrease (increase) in prepaid expenses 1,113 (4,977) (Decrease) increase in accounts payable and accrued liabilities (21,410) 9,105 Increase in other assets (870) (439) (Decrease) increase in other liabilities (1,308) 1,581 Other, net (509) (905) - -------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 33,855 13,237 - -------------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Additions to property, plant and equipment (27,486) (19,900) Proceeds from disposal of property, plant and equipment 5,899 169 Aircraft heavy maintenance (15,215) (11,406) Acquisitions, net of cash acquired, and related contingent payments (225) (1,693) Other, net 2,566 2,922 - -------------------------------------------------------------------------------------------------------------------------- Net cash used by investing activities (34,461) (29,908) - -------------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Additions to debt 2,878 16,482 Reductions of debt (1,361) (558) Payments from - Minerals Group 554 3,746 Proceeds from exercise of stock options 2,183 578 Proceeds from stock purchased by benefit plans 110 195 Dividends paid (3,479) (3,268) Repurchase of common stock (372) (1,134) Cost of Brink's Stock Proposal (1,237) - - -------------------------------------------------------------------------------------------------------------------------- Net cash (used) provided by financing activities (724) 16,041 - -------------------------------------------------------------------------------------------------------------------------- Net decrease in cash and cash equivalents (1,330) (630) Cash and cash equivalents at beginning of period 25,847 18,384 - -------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 24,517 17,754 - -------------------------------------------------------------------------------------------------------------------------- See accompanying notes to financial statements. -- 37

Pittston Burlington Group NOTES TO FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited) (1) The financial statements of the Pittston Burlington Group (the "Burlington Group") include the balance sheets, results of operations and cash flows of the Burlington Air Express Inc. ("Burlington") operations of The Pittston Company (the "Company"), and a portion of the Company's corporate assets and liabilities and related transactions which are not separately identified with operations of a specific segment. The Burlington Group's financial statements are prepared using the amounts included in the Company's consolidated financial statements. Corporate allocations reflected in these financial statements are determined based upon methods which management believes to be a reasonable and equitable allocation of such expenses and credits. The Company provides holders of Pittston Burlington Group Common Stock ("Burlington Stock") separate financial statements, financial reviews, descriptions of business and other relevant information for the Burlington Group in addition to consolidated financial information of the Company. Holders of Burlington Stock are shareholders of the Company, which is responsible for all its liabilities. Therefore, financial developments affecting the Pittston Minerals Group (the "Minerals Group"), the Pittston Brink's Group (the "Brink's Group") or the Burlington Group that affect the Company's financial condition could affect the results of operations and financial condition of all three Groups. Accordingly, the Company's consolidated financial statements must be read in conjunction with the Burlington Group's financial statements. (2) Depreciation and amortization of property, plant and equipment in the third quarter and nine months periods of 1996 and 1995 totaled $3,594 ($3,386 in 1995) and $11,247 ($9,822 in 1995), respectively. (3) Cash payments made for interest and income taxes (net of refunds received) were as follows: Third quarter Nine months 1996 1995 1996 1995 - -------------------------------------------------------------------------- Interest $ 1,238 845 3,793 3,312 - -------------------------------------------------------------------------- Income taxes $ 7,320 2,601 15,881 20,821 - -------------------------------------------------------------------------- During the nine month period ended September 30, 1996 and 1995, capital lease obligations of $61 and $4,284, respectively, were incurred for leases of property, plant and equipment. (4) As of January 1, 1996, the Burlington Group implemented a new accounting standard, Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires companies to review long-lived assets and certain identifiable intangibles to be held and used by an entity for impairment whenever circumstances indicate that the carrying amount for an asset may not be recoverable. SFAS No. 121 requires companies to utilize a two-step approach to determining whether impairment of such assets has occurred and, if so, the amount of such impairment. The adoption of SFAS No. 121 had no impact on the Burlington Group's financial statements as of January 1, 1996. (5) Certain prior period amounts have been reclassified to conform to current period financial statement presentation. (6) All adjustments have been made which are, in the opinion of management, necessary for a fair presentation of results of operations for the periods reported herein. All such adjustments are of a normal recurring nature. -- 38

Pittston Burlington Group MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The financial statements of the Pittston Burlington Group (the "Burlington Group") include the balance sheets, results of operations and cash flows of the Burlington Air Express Inc. ("Burlington") operations of the Pittston Company (the "Company"), and a portion of the Company's corporate assets and liabilities and related transactions which are not separately identified with operations of a specific segment. The Burlington Group's financial statements are prepared using the amounts included in the Company's consolidated financial statements. Corporate allocations reflected in these financial statements are determined based upon methods which management believes to be an equitable allocation of such expenses and credits. The accounting policies applicable to the preparation of the Burlington Group's financial statements may be modified or rescinded at the sole discretion of the Company's Board of Directors (the "Board") without the approval of the shareholders, although there is no intention to do so. The Company provides holders of Pittston Burlington Group Common Stock ("Burlington Stock") separate financial statements, financial reviews, descriptions of business and other relevant information for the Burlington Group in addition to consolidated financial information of the Company. Holders of Burlington Stock are shareholders of the Company, which continues to be responsible for all its liabilities. Therefore, financial developments affecting the Pittston Minerals Group (the "Minerals Group"), the Pittston Brink's Group (the "Brink's Group") or the Burlington Group that affect the Company's financial condition could affect the results of operations and financial condition any of the Groups. Accordingly, the Company's consolidated financial statements must be read in conjunction with the Burlington Group's financial statements. The following discussion is a summary of the key factors management considers necessary in reviewing the Burlington Group's results of operations, liquidity and capital resources. This discussion should be read in conjunction with the financial statements and related notes of the Company. SEGMENT INFORMATION (In thousands) Three Months Nine Months Ended September 30 Ended September 30 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------------------ Revenues: Burlington $ 377,656 365,793 1,093,017 1,031,687 - ------------------------------------------------------------------------------------------------------------------ Operating profit: Burlington $ 20,466 17,449 45,479 39,913 General corporate expense (2,558) (1,142) (5,884) (3,533) - ------------------------------------------------------------------------------------------------------------------ Operating profit $ 17,908 16,307 39,595 36,380 - ------------------------------------------------------------------------------------------------------------------ RESULTS OF OPERATIONS - --------------------- In the third quarter of 1996, the Burlington Group reported net income of $10.7 million, or $.56 per share, compared with $10.5 million, or $.55 per share, in the third quarter of 1995. Operating profit totaled $17.9 million in the 1996 third quarter compared with $16.3 million in the prior year third quarter. Increases in general corporate expenses were primarily related to the relocation of the Company's Corporate headquarters to Richmond, Virginia, which resulted in additional pretax expenses of $1.0 million in the third quarter of 1996. Results in 1995's third quarter benefited from a lower than normal quarterly tax rate which was required to adjust to the effective nine month tax rate. Revenues increased $11.9 million or 3%, compared with the 1995 third quarter. Operating expenses and selling, general and administrative expenses for the 1996 quarter increased $10.0 million, or 3%, compared with the same 1995 period. -- 39

In the first nine months of 1996, the Burlington Group reported net income of $23.2 million, or $1.21 per share, compared with $22.6 million, or $1.19 per share, in the first nine months of 1995. Operating profit totaled $39.6 million in the first nine months of 1996 compared with $39.4 million in the prior year nine month period. Revenues increased $61.3 million or 6%, compared with the same nine month period of 1995. Operating expenses and selling, general and administrative expenses for the 1996 nine month period increased $57.2 million, or 6%, compared with the same period last year. Burlington - ---------- The following is a table of selected financial data for Burlington on a comparative basis: Three Months Nine Months (In thousands - except per Ended September 30 Ended September 30 pound/shipment amounts) 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------------------ Revenues: Expedited freight services: Domestic U.S. $ 142,506 133,430 405,238 389,712 International 175,516 179,281 517,692 509,526 - ------------------------------------------------------------------------------------------------------------------ Total expedited freight services $ 318,022 312,711 922,930 899,238 Customs clearances 34,496 32,308 100,473 80,592 Ocean and other (a) 25,138 20,774 69,614 51,857 - ------------------------------------------------------------------------------------------------------------------ Total revenues $ 377,656 365,793 1,093,017 1,031,687 - ------------------------------------------------------------------------------------------------------------------ Operating profit: Domestic U.S. $ 11,783 8,781 25,520 20,261 International 8,683 8,668 19,959 19,652 - ------------------------------------------------------------------------------------------------------------------ Total operating profit $ 20,466 17,449 45,479 39,913 - ------------------------------------------------------------------------------------------------------------------ Depreciation and amortization $ 5,143 4,957 15,957 14,659 - ------------------------------------------------------------------------------------------------------------------ Cash capital expenditures $ 10,495 6,299 25,609 19,799 - ------------------------------------------------------------------------------------------------------------------ Expedited freight services shipment growth rate (b) (0.5%) 8.2% 2.8% 5.8% Expedited freight services weight growth rate (b): Domestic U.S. 6.7% (4.3%) 5.0% (4.2%) International (1.7%) 31.9% 4.5% 30.6% Worldwide 2.2% 12.1% 4.7% 11.5% Expedited freight services weight (million pounds) 362.0 354.0 1,059.2 1,011.3 - ------------------------------------------------------------------------------------------------------------------ Expedited freight services shipments (thousands) 1,294 1,300 3,914 3,808 - ------------------------------------------------------------------------------------------------------------------ Expedited freight services average: Yield (revenue per pound) $ .879 .883 .871 .889 Revenue per shipment $ 246 241 236 236 Weight per shipment (pounds) 280 272 271 266 - ------------------------------------------------------------------------------------------------------------------ (a) Primarily international ocean freight. (b) Compared to the same period in the prior year. -- 40

Burlington's third quarter worldwide operating profit amounted to $20.5 million, an increase of $3.0 million (17%) from the level reported in the third quarter of 1995. Worldwide revenues increased by 3% to $377.7 million from $365.8 million in the 1995 quarter. The $11.9 million growth in revenues principally reflects a 2% increase in worldwide expedited freight services pounds shipped, which reached 362.0 million pounds in the third quarter of 1996, and a 12% increase in other revenues (primarily customs clearance and ocean). Worldwide expenses amounted to $357.2 million, $8.8 million (3%) higher than in the third quarter of 1995. Domestic expedited freight services revenue of $142.5 million was $9.1 million (7%) higher than the prior year quarter. Domestic operating profit increased to $11.8 million in the third quarter of 1996 from $8.8 million in the prior year quarter. Operating profit benefited from stable pricing and higher volumes in the aerospace, electronics and consumer products segments, partially offset by declines in the automotive sector. Domestic average yields continued to be modestly higher than the levels of late 1995 and early 1996. During the quarter, Burlington benefited from the initiation in mid September of a 4.2(cents) per pound surcharge on domestic shipments. This surcharge is designed to partially offset some of the cost increases experienced by Burlington's domestic operations during 1996. These costs include the reimposition of a Federal Excise Tax on air cargo, higher jet fuel prices, a Federal Fuel Tax and new FAA-mandated security and maintenance requirements. International expedited freight services revenue of $175.5 million in the third quarter decreased slightly from the $179.3 million reported in the comparable quarter in 1995. Revenues from other activities, primarily international, which include transactions such as import related services as well as ocean freight services, increased 12% or $6.6 million to $59.6 million. International operating profit amounted to $8.7 million in the third quarter of 1996, unchanged from the 1995 quarter. International expedited freight services pricing slightly decreased from the third quarter of 1995 as overseas price weakness was only partially offset by improvement in U.S. export pricing. Burlington's worldwide operating profit amounted to $45.5 million in the first nine months of 1996, an increase of $5.6 million (14%) from the level reported in the first nine months of 1995. Worldwide revenues increased by 6% to $1,093.0 million from $1,031.7 million in the 1995 nine months. The $61.3 million growth in revenues principally reflects a 5% increase in worldwide expedited freight services pounds shipped, reaching 1,059.2 million pounds in the third quarter of 1996, and a 28% increase in other revenues (primarily customs clearance and ocean), partially offset by a 2% decline in the worldwide average yield. Worldwide expenses amounted to $1,047.5 million, $55.7 million (6%) higher than in the first nine months of 1995. Domestic expedited freight services revenue of $405.2 million in the first nine months of 1996 was $15.5 million (4%) higher than the prior year period. Domestic operating profit increased to $25.5 million in the first nine months of 1996 from $20.3 million in the prior year period. The higher operating profit reflected higher volume, lower average transportation costs, primarily the benefit of reduced Federal Excise Tax liabilities for the first nine months of the year, partially offset by lower average yields and higher fuel costs. The lower domestic average yield for the first nine months of 1996 versus the same 1995 period was due to lower average pricing and sales mix for Burlington's overnight service. International expedited freight services revenue of $517.7 million in the first nine months of 1996 represented an $8.2 million (2%) increase over the $509.5 million reported in the comparable period in 1995. Revenues from other activities increased 28% or $37.6 million to $170.1 million. International operating profit amounted to $20.0 million in the first nine months of 1996, a 2% increase from the first nine months of 1995, principally due to a 5% increase in international expedited freight service weight shipped, increased margin from import services and ocean freight and lower average transportation costs, partially offset by lower average yields. Foreign Operations - ------------------ A portion of the Burlington Group's financial results is derived from activities in several foreign countries, each with a local currency other than the U.S. dollar. Since the financial results of the Burlington Group are reported in U.S. dollars, they are affected by the changes in the value of the various foreign currencies in relation to the U.S. dollar. The Burlington Group's international activity is not concentrated in any single currency, which limits the risks of foreign currency rate fluctuations. In addition, foreign currency rate fluctuations may adversely affect transactions which are denominated in currencies other than the functional currency. The Burlington Group routinely enters into such transactions in the normal course of its business. Although the diversity of its foreign operations limits the risks associated with such -- 41

transactions, the Burlington Group uses foreign exchange forward contracts to hedge the risks associated with certain transactions denominated in currencies other than the functional currency. Realized and unrealized gains and losses on these contracts are deferred and recognized as part of the specific transaction hedged. In addition, cumulative translation adjustments relating to operations in countries with highly inflationary economies are included in net income, along with all transaction gains or losses for the period. A subsidiary in Brazil operates in such a highly inflationary economy. Additionally, the Burlington Group is subject to other risks customarily associated with doing business in foreign countries, including economic conditions, controls on repatriation of earnings and capital, nationalization, expropriation and other forms of restrictive action by local governments. The future effects, if any, of such risks on the Burlington Group cannot be predicted. Corporate Expenses - ------------------ A portion of the Company's corporate general and administrative expenses and other shared services has been allocated to the Burlington Group based on utilization and other methods and criteria which management believes to be a reasonable and equitable estimate of the costs attributable to the Burlington Group. These allocations were $2.6 million and $1.1 million for the third quarter of 1996 and 1995, respectively, and $5.9 million and $3.5 million for the first nine months of 1996 and 1995, respectively. The Company's corporate office was relocated to Richmond, Virginia during September 1996. The costs of this move for the first nine months of 1996, including moving expenses, employee relocation, severance pay and temporary employee costs, amounted to $2.9 million. Approximately $1.0 million of these costs were attributed to the Burlington Group. Other Income (Expense), Net - --------------------------- Other net expense for the third quarter of 1996 increased $0.3 million to $0.6 million as compared to the third quarter of 1995. For the first nine months of 1996 other net expense increased by $1.0 million to a net expense of $1.9 million from $0.9 million for the first nine months of 1995. Other net expense in the first nine months of 1996 included a loss for the termination of an overseas sublease agreement at Burlington. Income Taxes - ------------ The third quarter of 1995 reflected a lower than normal quarterly tax rate required to adjust to the effective nine month tax rate. FINANCIAL CONDITION - ------------------- A portion of the Company's corporate assets and liabilities has been attributed to the Burlington Group based upon utilization of the shared services from which assets and liabilities are generated, which management believes to be equitable and a reasonable estimate. Cash Provided by Operations - --------------------------- Cash provided by operating activities during the first nine months of 1996 totaled $33.9 million compared with $13.2 million in the first nine months of 1995. The increase in cash generated occurred principally as a result of higher noncash charges and a reduction in funding requirements for operating assets and liabilities. Capital Expenditures - -------------------- Cash capital expenditures for the first nine months of 1996 totaled $27.5 million, $25.7 million of which was spent by Burlington and $1.8 million of which was allocated to the Burlington Group for corporate expenditures primarily relating to the purchase of the Company's new corporate office building. For the full year 1996, capital expenditures are projected to be between $45.0 million and $50.0 million. The foregoing amounts exclude equipment expenditures that have been or are expected to be financed through capital and operating leases, and any acquisition expenditures. These expenditures will be primarily for maintenance and replacement, when necessary, of current business operations, including information systems and, to a lesser extent, for business expansion. -- 42

Other Investing Activities - -------------------------- Other investing activities required $7.0 million of cash compared to cash requirements of $10.0 million in the 1995 nine month period. Aircraft heavy maintenance outlays were $15.2 million and $11.4 million in the first nine months of 1996 and 1995, respectively. Cash proceeds from the disposal of assets increased by $5.7 million compared to the prior year period. Financing - --------- The Burlington Group intends to fund its capital expenditure requirements during the remainder of 1996 with anticipated cash flows from operating activities and through operating leases if the latter are financially attractive. Shortfalls, if any, will be financed through the Company's revolving credit agreements or other borrowing arrangements or repayments from the Minerals Group. The Company has a $350 million revolving credit agreement with a syndicate of banks (the "Facility"). The Facility includes a $100 million term loan and also permits additional borrowings, repayments, and reborrowings of up to an aggregate of $250 million. During the second quarter of 1996, the maturity date of both the term loan and revolving credit portion of the Facility was extended to May 31, 2001. Of the total outstanding under the Facility at September 30, 1996, none was attributed to the Burlington Group. Debt - ---- Outstanding debt totaled $62.3 million at September 30, 1996, an increase of $1.4 million from the $60.8 million reported at December 31, 1995. Related Party Transactions - -------------------------- At September 30, 1996, under an interest bearing borrowing arrangement, the Minerals Group owed the Burlington Group $19.4 million, a $0.5 million decrease from the $19.9 million owed at December 31, 1995. At September 30, 1996, in accordance with the Company's tax allocation policy, the Burlington Group owed the Minerals Group $20.1 million for tax benefits, a decrease of $1.9 million from the $22.0 million owed at December 31, 1995. Of the total amount of tax benefits owed the Minerals Group at September 30, 1996, $14.0 million is expected to be paid within one year. Capitalization - -------------- On January 18, 1996, the shareholders of the Company approved the Brink's Stock Proposal, resulting in the modification of the capital structure of the Company to include an additional class of common stock. The outstanding shares of Pittston Services Group Common Stock ("Services Stock") were redesignated as Pittston Brink's Group Common Stock ("Brink's Stock") on a share-for-share basis, and a new class of common stock, designated as Burlington Stock, was distributed on the basis of one-half share of Burlington Stock for each share of Services Stock previously held by shareholders of record on January 19, 1996. The Brink's Group consists of the Brink's and BHS operations of the Company. The Burlington Group consists of the Burlington operations of the Company. The Minerals Group consists of the Coal and Mineral Ventures operations of the Company. The approval of the Brink's Stock Proposal did not result in any transfer of assets and liabilities of the Company or any of its subsidiaries. The Company prepares separate financial statements for the Minerals, Brink's and Burlington Groups in addition to consolidated financial information of the Company. Brink's Stock, Burlington Stock and the Pittston Minerals Group Common Stock ("Minerals Stock") were designed to provide shareholders with separate securities reflecting the performance of the Brink's Group, Burlington Group and Minerals Group, respectively, without diminishing the benefits of remaining a single corporation or precluding future transactions affecting any of the Groups. -- 43

The redesignation of the Company's Services Stock as Brink's Stock and the distribution of Burlington Stock as a result of the approval of the Brink's Stock Proposal and the distribution of Minerals Stock in July 1993 (the "Services Stock Proposal") did not result in any transfer of assets and liabilities of the Company or any of its subsidiaries. Holders of all three classes of stock are shareholders of the Company, which continues to be responsible for all its liabilities. Therefore, financial developments affecting the Brink's Group, the Burlington Group or the Minerals Group that affect the Company's financial condition could affect the results of operations and financial condition of all three Groups. The changes in the capital structure of the Company had no effect on the Company's total capital, except as to expenses incurred in the execution of the Brink's Stock Proposal. Since the approval of the Brink's Stock Proposal and the earlier Service Stock Proposal, capitalization of the Company has been affected by the share activity related to each of the classes of common stock. In November 1995, the Board authorized, subject to shareholder approval of the Brink's Stock Proposal, a revised share repurchase program which allows for the purchase, from time to time, of up to 1,500,000 shares of Brink's Stock, 1,500,000 shares of Burlington Stock and 1,000,000 shares of Minerals stock, not to exceed an aggregate purchase price of $45.0 million. As of September 30, 1996, 20,300 shares of Burlington Stock at a total cost of $0.4 million have been purchased under the program. Between October 1, 1996 and November 11, 1996, the Company purchased 47,600 shares of Burlington Stock at a total cost of $0.9 million. In 1994, the Board authorized the purchase from time to time of up to $15 million of the Company's Series C Cumulative Convertible preferred stock. In November 1995, the Board authorized an increase in the remaining authority to $15 million. No share purchases were made in 1995 subsequent to the increased authorization. During the third quarter and first nine months of 1996, the Company purchased 10,320 and 20,920 shares, respectively, of its Series C Cumulative Convertible preferred stock a total cost of $3.9 and $7.9 million, respectively. Dividends - --------- The Board intends to declare and pay dividends on Burlington Stock based on earnings, financial condition, cash flow and business requirements of the Burlington Group. Since the Company remains subject to Virginia law limitations on dividends and to dividend restrictions in its public debt and bank credit agreements, financial developments of the Minerals Group or the Brink's Group could affect the Company's ability to pay dividends in respect of stock relating to the Burlington Group. During the first nine months of 1996 the Board declared and paid cash dividends of 18 cents per share of Burlington Stock. During the first nine months of 1995, the Board declared and the Company paid cash dividends of 15 cents per share of Services Stock of which 16.2 cents per share was attributed to the Burlington Stock after taking into account the one-half share distribution of Burlington Stock for each Services Stock share. The Company pays an annual cumulative dividend on its Series C Cumulative Convertible preferred stock of $31.25 per share payable quarterly, in cash, in arrears, out of all funds of the Company legally available when, and if declared by the Board of Directors of the Company. Such stock also bears a liquidation preference of $500 per share, plus an amount equal to accrued and unpaid dividends thereon. In the first nine months of 1996 and 1995, dividends paid on the Series C Cumulative Convertible preferred stock were $2.9 million and $3.3 million, respectively. -- 44

Pittston Minerals Group BALANCE SHEETS (In thousands) September 30, December 31, 1996 1995 - ------------------------------------------------------------------------------------------------------------------ (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 4,531 4,999 Short-term investments, at lower of cost or market - 26,046 Accounts receivable (net of estimated amount uncollectible: 1996 - $1,532; 1995 - $1,946) 80,527 87,775 Inventories, at lower of cost or market: Coal 32,554 37,329 Other 4,154 4,591 - ------------------------------------------------------------------------------------------------------------------ 36,708 41,920 Prepaid expenses 6,764 7,573 Deferred income taxes 28,921 30,677 - ------------------------------------------------------------------------------------------------------------------ Total current assets 157,451 198,990 Property, plant and equipment, at cost (net of accumulated depreciation, depletion and amortization: 1996 - $157,699; 1995 - $166,653) 176,906 199,344 Deferred pension assets 80,653 79,393 Deferred income taxes 67,530 80,699 Coal supply contracts 55,350 63,455 Intangibles, net of amortization 111,855 117,551 Receivable - Pittston Brink's Group 6,967 7,844 Receivable - Pittston Burlington Group 6,143 8,029 Other assets 46,441 43,304 - ------------------------------------------------------------------------------------------------------------------ Total assets $ 709,296 798,609 - ------------------------------------------------------------------------------------------------------------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Short-term bank borrowings $ - 24 Current maturities of long-term debt 161 1,199 Accounts payable 57,430 70,214 Payable - Pittston Brink's Group 5,356 3,945 Payable - Pittston Burlington Group 1,782 5,910 Accrued liabilities 121,165 138,384 - ------------------------------------------------------------------------------------------------------------------ Total current liabilities 185,894 219,676 Long-term debt, less current maturities 116,752 100,791 Postretirement benefits other than pensions 218,075 213,707 Workers' compensation and other claims 105,449 114,602 Reclamation 43,642 47,126 Other liabilities 51,805 111,386 Shareholders' equity (12,321) (8,679) - ------------------------------------------------------------------------------------------------------------------ Total liabilities and shareholders' equity $ 709,296 798,609 - ------------------------------------------------------------------------------------------------------------------ See accompanying notes to financial statements. -- 45

Pittston Minerals Group STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three Months Nine Months Ended September 30 Ended September 30 1996 1995 1996 1995 - -------------------------------------------------------------------------------------------------------------------------- Net sales $ 177,195 177,702 522,715 557,653 - -------------------------------------------------------------------------------------------------------------------------- Cost and expenses: Cost of sales 167,907 167,261 531,128 542,061 Restructuring and other charges, including litigation accrual - - (35,650) - Selling, general and administrative expenses 8,275 8,182 27,332 25,102 - -------------------------------------------------------------------------------------------------------------------------- Total costs and expenses 176,182 175,443 522,810 567,163 - -------------------------------------------------------------------------------------------------------------------------- Other operating income 1,812 3,259 11,298 19,999 - -------------------------------------------------------------------------------------------------------------------------- Operating profit 2,825 5,518 11,203 10,489 Interest income 187 178 507 372 Interest expense (2,694) (2,693) (8,315) (7,778) Other expense, net (449) (219) (1,339) (649) - -------------------------------------------------------------------------------------------------------------------------- Income (loss) before income taxes (131) 2,784 2,056 2,434 Credit for income taxes (2,629) (1,678) (6,106) (7,132) - -------------------------------------------------------------------------------------------------------------------------- Net income 2,498 4,462 8,162 9,566 Preferred stock dividends, net 146 (521) (773) (1,697) - -------------------------------------------------------------------------------------------------------------------------- Net income attributed to common shares $ 2,644 3,941 7,389 7,869 - -------------------------------------------------------------------------------------------------------------------------- Per common share: Net income Primary $ .33 .51 .94 1.01 Fully diluted $ .25 .45 .82 .96 - -------------------------------------------------------------------------------------------------------------------------- Cash dividends $ .1625 .1625 .4875 .4875 - -------------------------------------------------------------------------------------------------------------------------- Average common shares outstanding Primary 7,926 7,804 7,872 7,781 Fully diluted 9,819 9,964 9,920 10,013 - -------------------------------------------------------------------------------------------------------------------------- See accompanying notes to financial statements. -- 46

Pittston Minerals Group STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Nine months Ended September 30 1996 1995 - -------------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net income $ 8,162 9,566 Adjustments to reconcile net income to net cash provided by operating activities: Noncash charges and other write-offs 24,259 - Depreciation, depletion and amortization 27,674 31,747 Provision for deferred income taxes 15,130 11,185 Credit for pensions, noncurrent (1,261) (2,635) Provision for uncollectible accounts receivable 251 100 Equity in earnings of unconsolidated affiliates, net of dividends received (222) 15 Other operating, net (754) (3,054) Change in operating assets and liabilities net of effects of acquisitions and dispositions: Decrease in accounts receivable 3,743 17,308 Decrease (increase) in inventories 5,211 (12,235) Decrease in prepaid expenses 76 1,618 Decrease in accounts payable and accrued liabilities (7,210) (7,813) (Increase) decrease in other assets (3,348) 1,426 Decrease in other liabilities (48,559) (18,909) Decrease in workers' compensation and other claims, noncurrent (9,153) (14,456) Other, net 254 118 - -------------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 14,253 13,981 - -------------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Additions to property, plant and equipment (17,662) (14,590) Proceeds from disposal of property, plant and equipment 3,719 16,112 Acquisitions, net of cash acquired, and related contingent payments (746) (1,078) Other, net 2,885 220 - -------------------------------------------------------------------------------------------------------------------------- Net cash (used) provided by investing activities (11,804) 664 - -------------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Additions to debt 15,615 - Reductions of debt (1,233) (9,114) Payments (to) from - Brink's Group (2,163) 9,936 Payments to - Burlington Group (554) (3,746) Repurchase of stock (7,896) (7,171) Proceeds from exercise of stock options 9 1,202 Proceeds from stock purchased by benefit plans 163 177 Dividends paid (6,858) (7,348) - -------------------------------------------------------------------------------------------------------------------------- Net cash used by financing activities (2,917) (16,064) - -------------------------------------------------------------------------------------------------------------------------- Net decrease in cash and cash equivalents (468) (1,419) Cash and cash equivalents at beginning of period 4,999 3,708 - -------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 4,531 2,289 - -------------------------------------------------------------------------------------------------------------------------- See accompanying notes to financial statements. -- 47

Pittston Minerals Group NOTES TO FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited) (1) The financial statements of the Pittston Minerals Group (the "Minerals Group") include the balance sheets, results of operations and cash flows of Coal and Mineral Ventures operations of The Pittston Company (the "Company"), and a portion of the Company's corporate assets and liabilities and related transactions which are not separately identified with operations of a specific segment. The Minerals Group's financial statements are prepared using the amounts included in the Company's consolidated financial statements. Corporate allocations reflected in these financial statements are determined based upon methods which management believes to be a reasonable and equitable allocation of such expenses and credits. The Company provides holders of Pittston Minerals Group Common Stock ("Minerals Stock") separate financial statements, financial reviews, descriptions of business and other relevant information for the Minerals Group in addition to consolidated financial information of the Company. Holders of Minerals Stock are shareholders of the Company, which continues to be responsible for all its liabilities. Therefore, financial developments affecting the Minerals Group, the Pittston Brink's Group (the "Brink's Group") or the Pittston Burlington Group (the "Burlington Group") that affect the Company's financial condition could affect the results of operations and financial condition of all three Groups. Accordingly, the Company's consolidated financial statements must be read in conjunction with the Minerals Group's financial statements. (2) Depreciation, depletion and amortization of property, plant and equipment in the third quarter and nine month periods of 1996 and 1995 totaled $5,873 ($6,211 in 1995) and $17,058 ($18,858 in 1995), respectively. (3) Cash payments made for interest and income taxes (net of refunds received) were as follows: Third quarter Nine months 1996 1995 1996 1995 - -------------------------------------------------------------------------------------------- Interest $ 2,263 2,486 8,253 7,658 - -------------------------------------------------------------------------------------------- Income taxes $ (7,999) (4,286) (23,923) (16,533) - -------------------------------------------------------------------------------------------- During the nine month period ended September 30, 1996 and 1995, capital lease obligations of $494 and $52, respectively, were incurred for leases of property, plant and equipment. In June 1995, the Company sold its rights under certain coal reserve leases and the related equipment for $2,800 in cash and notes totaling $2,882. The cash proceeds have been included in the Consolidated Statement of Cash Flows as "Cash flows from investing activities: Proceeds from disposal of property, plant and equipment". In March 1995, the Minerals Group sold surplus coal reserves for cash of $2,878 and a note receivable of $2,317. The cash proceeds have been included in the Statement of Cash Flows as "Cash flows from investing activities: Proceeds from disposal of property, plant and equipment". (4) In 1988, the trustees of certain pension and benefit trust funds (the "Trust Funds") established under collective bargaining agreements with the United Mine Workers of America ("UMWA") brought an action (the "Evergreen Case") against the Company and a number of its coal subsidiaries, claiming that the defendants were obligated to contribute to such Trust Funds in accordance with the provisions of the 1988 and subsequent National Bituminous Coal Wage Agreements, to which neither the Company nor any of its subsidiaries was a signatory. -- 48

In late March 1996, a settlement was reached in the Evergreen Case. Under the terms of the settlement, the coal subsidiaries which had been signatories to earlier National Bituminous Coal Wage Agreements agreed to make various lump sum payments in full satisfaction of all amounts allegedly due to the Trust Funds through January 31, 1996, to be paid over time as follows: $25,845 upon dismissal of the Evergreen Case in March 1996 and the remainder of $24,000 in installments of $7,000 in August 1996 and $8,500 in each of 1997 and 1998. The first payment was entirely funded through an escrow account previously established by the Minerals Group. The amount previously escrowed and accrued was included in "Short-term investments" and "Accrued liabilities" on the Minerals Group's balance sheet. The second payment of $7,000 was paid in the third quarter of 1996 and was funded through cash provided by operating activities. In addition, the coal subsidiaries agreed to future participation in the UMWA 1974 Pension Plan. Separate lawsuits against each of the UMWA and the Bituminous Coal Operators Association, previously reported, have also been dismissed. As a result of the settlement of these cases at an amount lower than previously accrued in 1993, the Minerals Group recorded a pretax benefit of $35,650 ($23,173 after tax) in the first quarter of 1996 in its financial statements. (5) As of January 1, 1996, the Minerals Group implemented a new accounting standard, Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires companies to review long-lived assets and certain identifiable intangibles to be held and used by an entity for impairment whenever circumstances indicate that the carrying amount of an asset may not be recoverable. In accordance with SFAS No. 121, the Minerals Group grouped its long-lived assets at the lowest level for which there are identifiable cash flows that are independent of the cash flows of other groups of assets, and determined the recoverability of such assets by comparing the sum of the expected undiscounted future cash flows with the carrying amount of the assets. The impact of adopting SFAS No. 121 resulted in a pretax charge to earnings as of January 1, 1996 for the Minerals Group's Coal operations of $27,839 ($18,095 after tax), of which $24,203 was included in cost of sales and $3,636 was included in selling, general and administrative expenses. Assets for which the impairment loss was recognized consisted of property, plant and equipment, advanced royalties and goodwill. These assets primarily related to mines scheduled for closure in the near term and idled facilities and related equipment. Based on current mining plans, geological conditions, and current assumptions related to future realization and costs, the sum of the expected undiscounted future cash flows was less than the carrying amount of the assets, and accordingly, an impairment loss was recognized. The loss was calculated based on the excess of the carrying value of the assets over the present value of estimated expected future cash flows, using a discount rate commensurate with the risks involved. (6) During the quarter and nine months ended September 30, 1996, the Company purchased 10,320 and 20,920 shares, respectively, of its Series C Cumulative Convertible Preferred Stock. Preferred dividends included on the statement of operations for the quarter and nine months ended September 30, 1996, are net of $1,020 and $2,120, respectively, which is the excess of the carrying amount of the preferred stock over the cash paid to holders of the preferred stock. During the quarter and nine months ended September 30, 1995, the Company purchased 3,700 and 16,370 shares, respectively, of its preferred stock. Preferred dividends for the third quarter and first nine months of 1995 are net of $535 and $1,579, respectively, which was the excess of the carrying amount of the preferred stock over the cash paid to holders of the preferred stock. -- 49

(7) Certain prior period amounts have been reclassified to conform to current period financial statement presentation. (8) All adjustments have been made which are, in the opinion of management, necessary for a fair presentation of results of operations for the periods reported herein. All such adjustments are of a normal recurring nature. -- 50

Pittston Minerals Group MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The financial statements of the Pittston Minerals Group (the "Minerals Group") include the balance sheets, results of operations and cash flows of the Coal and Mineral Ventures operations of The Pittston Company (the "Company"), and a portion of the Company's corporate assets and liabilities and related transactions which are not separately identified with operations of a specific segment. The Minerals Group's financial statements are prepared using the amounts included in the Company's consolidated financial statements. Corporate allocations reflected in these financial statements are determined based upon methods which management believes to be an equitable allocation of such expenses and credits. The accounting policies applicable to the preparation of the Minerals Group's financial statements may be modified or rescinded at the sole discretion of the Company's Board of Directors (the "Board") without the approval of the shareholders, although there is no intention to do so. The Company provides to holders of the Pittston Minerals Group Common Stock ("Minerals Stock") separate financial statements, financial reviews, descriptions of business and other relevant information for the Minerals Group in addition to consolidated financial information of the Company. Holders of Minerals Stock are shareholders of the Company, which continues to be responsible for all its liabilities. Therefore, financial developments affecting the Minerals Group, the Pittston Brink's Group (the "Brink's Group") or the Pittston Burlington Group (the "Burlington Group") that affect the Company's financial condition could affect the results of operations and financial condition of any of the Groups. Accordingly, the Company's consolidated financial statements must be read in conjunction with the Minerals Group's financial statements. The following discussion is a summary of the key factors management considers necessary in reviewing the Minerals Group's results of operations, liquidity and capital resources. This discussion should be read in conjunction with the financial statements and related notes of the Company. SEGMENT INFORMATION (In thousands) Three Months Nine Months Ended September 30 Ended September 30 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------------------ Net sales: Coal $ 172,603 173,985 507,967 545,255 Mineral Ventures 4,592 3,717 14,748 12,398 - ------------------------------------------------------------------------------------------------------------------ Net sales $ 177,195 177,702 522,715 557,653 - ------------------------------------------------------------------------------------------------------------------ Operating profit (loss): Coal $ 5,393 8,075 14,960 15,196 Mineral Ventures (324) (816) 1,425 675 - ------------------------------------------------------------------------------------------------------------------ Segment operating profit 5,069 7,259 16,385 15,871 General corporate expense (2,244) (1,741) (5,182) (5,382) - ------------------------------------------------------------------------------------------------------------------ Operating profit $ 2,825 5,518 11,203 10,489 - ------------------------------------------------------------------------------------------------------------------ -- 51

RESULTS OF OPERATIONS - --------------------- In the third quarter of 1996, the Minerals Group reported net income of $2.5 million or $.33 per common share ($.25 on a fully diluted basis) compared to $4.5 million or $.51 per share ($.45 on a fully diluted basis) in the third quarter of 1995. Operating profit totaled $2.8 million in the 1996 third quarter compared to $5.5 million in the prior year quarter. Net sales decreased $0.5 million (0.3%), compared with the 1995 third quarter. Cost of sales and selling, general and administrative expenses for the 1996 period increased $0.7 million (0.4%), compared with the same period of 1995. Net income and operating expenses were impacted by a $0.8 million pre-tax increase in general corporate expenses related to the relocation of the Company's corporate headquarters to Richmond, Virginia. In the first nine months of 1996, the Minerals Group reported net income of $8.2 million or $.94 per share ($.82 per share on a fully diluted basis), compared to net income of $9.6 million or $1.01 per share ($.96 per share on a fully diluted basis) in the first nine months of 1995. Operating profit totaled $11.2 million in the first nine months of 1996 compared with $10.5 million in the first nine months of the prior year. Net sales during the 1996 nine month period decreased $34.9 million (6%) compared to the corresponding period in 1995. In the first nine months of 1996, operating profits included two significant non-recurring items (related to Coal operations): a $35.7 million benefit from the settlement of the Evergreen lawsuit at an amount lower than previously accrued ($23.2 million after tax) and a $27.8 million charge related to the implementation of a new accounting standard regarding the impairment of long-lived assets ($18.1 million after tax). Coal - ---- The following is a table of selected financial data for the Coal operations on a comparative basis: Three Months Nine Months Ended September 30 Ended September 30 (In thousands) 1996 1995 1996 1995 - ------------------------------------------------------------------------------------------------------------------ Net sales $ 172,603 173,985 507,967 545,255 Cost of sales 164,251 164,032 520,367 532,977 Selling, general and administrative 4,985 5,394 19,366 17,096 Restructuring and other charges, including litigation accrual - - (35,650) - - ------------------------------------------------------------------------------------------------------------------ Total costs and expenses 169,236 169,426 504,083 550,073 - ------------------------------------------------------------------------------------------------------------------ Other operating income 2,026 3,516 11,076 20,014 - ------------------------------------------------------------------------------------------------------------------ Operating profit $ 5,393 8,075 14,960 15,196 - ------------------------------------------------------------------------------------------------------------------ Coal sales (tons): Metallurgical 1,979 1,950 5,978 6,583 Utility and industrial 3,837 3,943 11,240 12,471 - ------------------------------------------------------------------------------------------------------------------ Total coal sales 5,816 5,893 17,218 19,054 - ------------------------------------------------------------------------------------------------------------------ Production/purchased (tons): Deep 924 984 2,977 3,025 Surface 2,764 3,143 8,351 10,272 Contract 408 459 1,261 1,500 - ------------------------------------------------------------------------------------------------------------------ 4,096 4,586 12,589 14,797 Purchased 1,380 1,289 4,365 4,791 - ------------------------------------------------------------------------------------------------------------------ Total 5,476 5,875 16,954 19,588 - ------------------------------------------------------------------------------------------------------------------ -- 52

shortfalls and higher operating cost as compared to the first half of 1996 and the 1995 third quarter. In the third quarter of 1995, costs and production were negatively impacted by adverse geological conditions. Operating profit for the first nine months increased $0.7 million to $1.4 million from the comparable period in 1995 as volume, price and cost all improved from the prior year. During the second quarter, the Australian joint venture in which Mineral Ventures owns a 34% direct interest, formally announced that the Silver Swan nickel deposit in Australia (50% owned by the Australian joint venture) will be developed as an underground mine with production expected to commence in mid-1997. As of September 30, 1996, the main production shaft has reached 809 meters. In addition, exploration drilling has indicated the presence of a previously unknown area of high grade mineralization (approximately 8 -10% nickel) some 100 meters to the south of Silver Swan and 750 meters below the surface. However, at this time, sufficient data has not been developed to determine whether this area will be commercially significant. Other Operating Income - ---------------------- Other operating income for the third quarter of 1996 decreased $1.5 million to $1.8 million from $3.3 million in the 1995 third quarter and in the first nine months of 1996 decreased $8.7 million to $11.3 million from $20.0 million in the first nine months of 1995. Other operating income principally includes royalty income and gains and losses from sales of coal assets. The 1995 third quarter reflects $1.5 million of income generated from the disposition of highwall mining equipment and additionally, the first nine months of 1995 included a pretax gain of $8.3 million related to the disposition of coal reserves. The first nine months of 1996 included $3.0 million from favorable litigation settlements. Corporate Expenses - ------------------ A portion of the Company's corporate general and administrative expenses and other shared services has been allocated to the Minerals Group based on utilization and other methods and criteria which management believes to be a reasonable and equitable estimate of the costs attributable to the Minerals Group. These allocations were $2.2 million and $1.7 million for the third quarter of 1996 and 1995, respectively, and $5.2 million and $5.4 million for the first nine months of 1996 and 1995, respectively. The Company's corporate office was relocated to Richmond, Virginia during September 1996. The costs of this relocation for the first nine months of 1996, including moving expenses, employee relocation, severance pay and temporary employee costs, amounted to $2.9 million. Approximately $0.9 million of these costs were attributed to the Minerals Group. Interest Expense - ---------------- Interest expense was $2.7 million in both the third quarter of 1996 and 1995, and increased $0.5 million in the first nine months of 1996 to $8.3 million from $7.8 million in the first nine months of 1995. The increase in interest expense in the first nine months of 1996 is the result of higher average debt balances. Income Taxes - ------------ Net income in the third quarter and first nine months of 1996 and 1995 includes a tax credit which exceeds the amount calculated based on the statutory federal income tax rate of 35% primarily as a result of the tax benefits of percentage depletion. FINANCIAL CONDITION - ------------------- A portion of the Company's corporate assets and liabilities has been attributed to the Minerals Group based upon utilization of the shared services from which assets and liabilities are generated, which management believes to be equitable and a reasonable estimate. -- 57

Cash Provided by Operating Activities - ------------------------------------- Operating activities for the first nine months of 1996 provided cash of $14.3 million, an increase of $0.3 million over the 1995 comparable period. Net income, noncash charges and changes in operating assets and liabilities in the first nine months of 1996 were significantly affected by two nonrecurring items, a benefit from the settlement of the Evergreen case at an amount less than originally accrued and a charge related to the implementation of SFAS 121. These items had no effect on cash generated by operations except that the second settlement payment of $7.0 million was paid from operating cash in the third quarter. The initial payment of $25.8 million related to the Evergreen case settlement was entirely funded by an escrow account previously established by the Company. The amount previously escrowed and accrued was included in "Short-term investments" and "Accrued liabilities" on the Minerals Group's balance sheet. Capital Expenditures - -------------------- Cash capital expenditures for the first nine months of 1996 and 1995 totaled $17.7 million and $14.6 million, respectively, excluding equipment expenditures that have been or are expected to be financed through capital and operating leases. In 1996, Mineral Ventures and Coal operations spent $2.0 million and $14.1 million, respectively, and $1.6 million was allocated to the Minerals Group for corporate expenditures primarily related to the purchase of the Company's new corporate office building. For the full year of 1996, capital expenditures, excluding expenditures that have been or are expected to be financed through capital and operating leases, are estimated to be between $25.0 million and $30.0 million. Other Investing Activities - -------------------------- All other investing activities in the first nine months of 1996 provided net cash of $5.9 million, largely as a result of proceeds from the disposal of property, plant and equipment. Financing - --------- The Minerals Group intends to fund its capital expenditure requirements during the remainder of 1996 primarily with anticipated cash flows from operating activities and through operating and capital leases if the latter are financially attractive. Shortfalls, if any, will be financed through the Company's revolving credit agreements, other borrowing arrangements or borrowings from the Brink's and Burlington Groups. The Company has a $350 million revolving credit agreement with a syndicate of banks (the "Facility"). The Facility includes a $100 million term loan and also permits additional borrowings, repayments, and reborrowings of up to an aggregate of $250 million. During the second quarter of 1996, the maturity date of both the term loan and revolving credit portion of the Facility was extended to May 31, 2001. As of September 30, 1996, borrowings of $100 million were outstanding under the term loan portion of the Facility and $15.6 million of additional borrowings were outstanding under the remainder of the Facility. Of the total borrowings outstanding under the Facility, all were attributed to the Minerals Group. Debt - ---- Total debt outstanding at September 30, 1996 was $116.9 million, an increase of $14.9 million from the year-end 1995 amount. Borrowings to fund capital expenditures and net costs related to share activity during the first nine months of 1996 were made under the Company's revolving credit agreements. Related Party Transactions - -------------------------- At September 30, 1996, under interest bearing borrowing arrangements, the Minerals Group owed the Brink's Group $15.8 million, a decrease of $2.1 million from the $17.9 million owed at December 31, 1995. The Minerals Group also owed the Burlington Group $19.4 million at the end of the third quarter of 1996, $0.5 million lower than the $19.9 million owed at year-end 1995. At September 30, 1996, in accordance with the Company's tax allocation policy, the Brink's Group owed the Minerals Group $21.0 million and the Burlington Group owed the Minerals Group $20.1 million for tax benefits. Payments of $14.0 million from each Group are expected to be made within one year. -- 58

Capitalization - -------------- On January 18, 1996, the shareholders of the Company approved the Brink's Stock Proposal, resulting in the modification of the capital structure of the Company to include an additional class of common stock. The outstanding shares of Pittston Services Group Common Stock ("Services Stock") were redesignated as Pittston Brink's Group Common Stock ("Brink's Stock") on a share-for-share basis, and a new class of common stock, designated as Pittston Burlington Group Common Stock ("Burlington Stock"), was distributed on the basis of one-half share of Burlington Stock for each share of Services Stock previously held by shareholders of record on January 19, 1996. The Brink's Group consists of the Brink's and BHS operations of the Company. The Burlington Group consists of the Burlington operations of the Company. The Minerals Group consists of the Coal and Mineral Ventures operations of the Company. The approval of the Brink's Stock Proposal did not result in any transfer of assets and liabilities of the Company or any of its subsidiaries. The Company prepares separate financial statements for the Minerals, Brink's and Burlington Groups in addition to consolidated financial information of the Company. Brink's Stock, Burlington Stock and Minerals Stock were designed to provide shareholders with separate securities reflecting the performance of the Brink's Group, Burlington Group and Minerals Group, respectively, without diminishing the benefits of remaining a single corporation or precluding future transactions affecting any of the Groups. The redesignation of the Company's Services Stock as Brink's Stock and the distribution of Burlington Stock as a result of the approval of the Brink's Stock Proposal and the distribution of Minerals Stock in July 1993 (the "Services Stock Proposal") did not result in any transfer of assets and liabilities of the Company or any of its subsidiaries. Holders of all three classes of stock are shareholders of the Company, which continues to be responsible for all its liabilities. Therefore, financial developments affecting the Brink's Group, the Burlington Group or the Minerals Group that affect the Company's financial condition could affect the results of operations and financial condition of all three Groups. The changes in the capital structure of the Company had no effect on the Company's total capital, except as to expenses incurred in the execution of the Brink's Stock Proposal. Since the approval of the Brink's Stock Proposal and the earlier Services Stock Proposal, capitalization of the Company has been affected by the share activity related to each of the classes of common stock. In November 1995, the Board authorized, subject to shareholder approval of the Brink's Stock Proposal, a revised share repurchase program which allows for the purchase, from time to time, of up to 1,500,000 shares of Brink's Stock, 1,500,000 shares of Burlington Stock and 1,000,000 shares of Minerals Stock, not to exceed an aggregate purchase price of $45.0 million. As of September 30, 1996, no shares of Minerals Stock have been purchased under the program. Between October 1, 1996 and November 11, 1996, the Company purchased 47,600 shares of Burlington Stock at a total cost of $0.9 million. In 1994, the Board authorized the purchase from time to time of up to $15 million of the Company's Series C Cumulative Convertible preferred stock. In November 1995, the Board authorized an increase in the remaining authority to $15 million. No share purchases were made in 1995 subsequent to the increased authorization. During the third quarter and first nine months of 1996, the Company purchased 10,320 and 20,920 shares, respectively, of its Series C Cumulative Convertible preferred stock a total cost of $3.9 million and $7.9 million, respectively. Dividends - --------- The Board intends to declare and pay dividends on Brink's Stock, Burlington Stock and Minerals Stock based on earnings, financial condition, cash flow and business requirements of the each of the Groups, respectively. Since the Company remains subject to Virginia law limitations on dividends and to dividend restrictions in its public debt and bank credit agreements, financial developments of one Group could affect the Company's ability to pay dividends in respect of stock relating to the other Group. Dividends on Minerals Stock are also limited by the Available Minerals Dividend Amount, which is adjusted by net income or losses and other equity transactions, as defined in the Company's Articles of Incorporation. At September 30, 1996 the Available Minerals Dividend Amount was at least $21.4 million. -- 59

During the first nine months of 1996 and 1995, the Board declared and the Company paid cash dividends of 48.75 cents per share of Minerals Stock. Dividends paid on the Series C Cumulative Convertible preferred stock in the first nine months of 1996 and 1995 totaled $2.9 million and $3.3 million, respectively. Preferred dividends included on the Minerals Group's Statement of Operations for the nine months ended September 30, 1996 and 1995, are net of $2.1 million and $1.6 million, respectively, which was the excess of the carrying amount of the preferred stock over the cash paid to holders of the preferred stock. -- 60

Part II - Other Information Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit Number 11 Statement re Computation of Per Shares Earnings. (b) No reports on Form 8-K were filed during the third quarter of 1996. -- 61

SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. THE PITTSTON COMPANY November 14, 1996 By G. R. Rogliano --------------------------------- (G. R. Rogliano) Senior Vice President (Duly Authorized Officer and Chief Accounting Officer) -- 62

Exhibit 11 The Pittston Company and Subsidiaries Computation of Earnings Per Common Share (In thousands, except per share amounts) Fully Diluted Earnings Per Common Share: - ---------------------------------------- Three Months Nine Months Ended September 30 Ended September 30 1996 1995 1996 1995 - -------------------------------------------------------------------------------------------------------------------- Pittston Brink's Group: Net income attributed to common shares $ 15,841 14,613 41,714 36,124 - -------------------------------------------------------------------------------------------------------------------- Average common shares outstanding 38,264 37,916 38,158 37,914 Incremental shares of stock options 586 376 590 361 - -------------------------------------------------------------------------------------------------------------------- Pro forma shares outstanding 38,850 38,292 38,748 38,275 - -------------------------------------------------------------------------------------------------------------------- Fully diluted earnings per common share: $ .41 .38 1.08 .94 - -------------------------------------------------------------------------------------------------------------------- Pittston Burlington Group: Net income attributed to common shares $ 10,705 10,524 23,214 22,582 - -------------------------------------------------------------------------------------------------------------------- Average common shares outstanding 19,283 18,958 19,161 18,957 Incremental shares of stock options 435 188 471 181 - -------------------------------------------------------------------------------------------------------------------- Pro forma common shares outstanding 19,718 19,146 19,632 19,138 - -------------------------------------------------------------------------------------------------------------------- Fully diluted earnings per common share $ .54 .55 1.18 1.18 - -------------------------------------------------------------------------------------------------------------------- Pittston Minerals Group: Net income attributed to common shares $ 2,644 3,941 7,389 7,869 Preferred stock dividends, net (146) 521 773 1,697 - -------------------------------------------------------------------------------------------------------------------- Fully diluted net income attributed to common shares $ 2,498 4,462 8,162 9,566 - -------------------------------------------------------------------------------------------------------------------- Average common shares outstanding 7,926 7,804 7,872 7,781 Incremental shares of stock options 52 23 52 23 Conversion preferred stock 1,841 2,137 1,996 2,209 - -------------------------------------------------------------------------------------------------------------------- Pro forma common shares outstanding 9,819 9,964 9,920 10,013 - -------------------------------------------------------------------------------------------------------------------- Fully diluted earnings per common share: $ .25 .45 (a) .82 .96 - -------------------------------------------------------------------------------------------------------------------- (a) Antidilutive, therefore the same as primary. Primary Earnings Per Share: - --------------------------- Primary earnings per share can be computed from the information on the face of the Consolidated Statements of Operations.

5 This schedule contains summary financial information from The Pittston Company Form 10Q for the quarterly period ended September 30, 1996, and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS DEC-31-1996 SEP-30-1996 54,623 2,223 404,285 15,986 41,400 607,399 975,243 455,500 1,788,855 570,113 149,967 70,746 0 1,154 511,159 1,788,855 522,715 2,282,369 531,128 1,996,867 (35,650) 5,314 10,533 101,632 28,542 73,090 0 0 0 73,090 0

0 Pittston Brink's Group - Primary - 1.09 Pittston Burlington Group - Primary - 1.21 Pittston Minerals Group - Primary - .94 Pittston Brink's Group - Diluted - 1.09 Pittston Burlington Group - Diluted - 1.21 Pittston Minerals Group - Diluted - .82